Question: On August 1 2017 Aiken Corporation enters into a contract

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.
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?

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  • CreatedOctober 05, 2015
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