Question

On November 20, 2011, Billy Pilgrim Technology agreed to manufacture and supply 1,000 centrifuges used by Cathcart Systems to produce chemicals. Cathcart deposited $260 per unit upon signing the three-year purchase agreement, which set the selling price of each centrifuge at $1,300. Billy Pilgrim will record these units at $500 per unit in inventory. No units were delivered during 2011. During 2012, 350 units will be delivered, 400 units will be delivered during 2013, and the remaining units will be delivered during 2014. Assume Billy Pilgrim uses a perpetual inventory system.

Required:
1. Prepare the entry by Billy Pilgrim to record receipt of the deposit during 2011. How would the deposit be reported in the financial statements at the end of 2011?
2. Prepare the entry by Billy Pilgrim to record the delivery of 350 units during 2012. How would the deposit be reported in the financial statements at the end of 2012?
3. Prepare the entry by Billy Pilgrim to record the delivery of 400 units during 2013. Cathcart pays in cash upon delivery for units not covered by the deposit.


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  • CreatedSeptember 22, 2015
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