Entity A is a manufacturer of consumer goods.  On 1 January 2020, Entity A entered into a one-year contract to sell goods to a large global chain of retail stores.  The customer committed to buying at least $90,000,000 of products in January.  The contract required Entity A to make a non-refundable payment of $200,000 to the customer at the inception of the contract.  The $200,000 payment is to compensate the customer for the changes required to its shelving to accommodate Entity A's products.  Entity A duly paid this $200,000 to the customer on 3 January 2020. Entity A transferred goods with an invoice price of $98,000,000 to the customer on 31 January 2020.  The customer agreed to settle the outstanding amount by two payments, i.e. 40% and 60% of the outstanding amount on 18 February 2020 and 31 March 2020 respectively. REQUIRED: Provide journal entries for Entity A from 1 January 2020 to 31 March 2020 under relevant accounting standards.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Entity A is a manufacturer of consumer goods.  On 1 January 2020, Entity A entered into a one-year contract to sell goods to a large global chain of retail stores.  The customer committed to buying at least $90,000,000 of products in January.  The contract required Entity A to make a non-refundable payment of $200,000 to the customer at the inception of the contract.  The $200,000 payment is to compensate the customer for the changes required to its shelving to accommodate Entity A's products.  Entity A duly paid this $200,000 to the customer on 3 January 2020.

Entity A transferred goods with an invoice price of $98,000,000 to the customer on 31 January 2020.  The customer agreed to settle the outstanding amount by two payments, i.e. 40% and 60% of the outstanding amount on 18 February 2020 and 31 March 2020 respectively.

REQUIRED:

Provide journal entries for Entity A from 1 January 2020 to 31 March 2020 under relevant accounting standards.

ACCOUNT FOR INPUT:

| Bank | Payable | Receivable | Interest expense | Interest revenue | Inventory | PPE |

| Asset for product to be returned | Commission expense | Commission revenue | Revenue |

| Cost of sales | Contract asset | Contract liability | Retained earnings | No entry |

ANSWERS:

Journal Entries:

Date Account Name Debit ($) Credit ($) Hints For Sequence
1-Jan-20       -
        -
3-Jan-20       -
        -
31-Jan-20        -
      Judge Dr/Cr Side.  Only Input the Amount.
        An Asset Account.
18-Feb-20       -
        -
31-Mar-20       -
        -
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