On January 1, 2019, Spring Fashions Inc. enters into a contract with a southeast retail company to provide 500 dresses for $62,500 ($125 per dress) over the next 10 months. On October 1, 2019, after 450 of the dresses had been delivered (50 dresses per month), the contract is modified.
Required:
1.
Journalize entries to record revenue for Company S.
Contract modification: In a contract, Companies generally modify the respective rights and performance obligations. An agreed-upon change in the goods or services that must be delivered or the contract’s price is known as a contract modification and it is also referred as contract amendment or change order.
Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Accounting rules for Journal entries:
Prepare monthly journal entry from January to September:
Date | Account titles and explanation | Debit ($) | Credit ($) |
 Cash (1) |  6,250 |  | |
   sales revenue |  | 6,250 | |
 ( To record the amount of sales revenue ) |  |  |
Table (1)
2.
Journalize entries to record contract modification.
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