On August 1, 2017, Aiken Corporation enters into a contract with Benton Corp. to sell it $ 25,000 of goods. Aiken will deliver the goods on August 30, 2017, and Benton will pay the full amount upon acceptance. The goods were manufactured by Aiken at a cost of $ 18,000. Both Aiken and Benton consider the acceptance of the goods on August 30 a formality given that Benton has purchased the same goods from Aiken numerous times without incident. On August 30, 2017, Aiken delivers the goods and Benton transfers cash to Aiken.
Required:
1. Does an enforceable contract exist between Aiken and Benton on August 1, 2017?
2. Prepare the journal entries in August 2017 necessary to account for this transaction. Assume Aiken uses a perpetual inventory system.
3. Next Level Assume that the contract is noncancelable. Would this condition allow Aiken to recognize revenue on August 1, 2017?