Question

On November 20, 2011, Green Bay Electronics agreed to manufacture and supply 750 electronic control units used by Wausau Heating Systems in large commercial and industrial installments. On that date, Wausau deposited $250 per unit upon signing the three-year purchase agreement, which set the selling price of each control unit at $1,000. Green Bay’s inventory cost is $225 per unit. No units were delivered during 2011. The first 200 units will be delivered in 2012, 300 units will be delivered during 2013, and the remaining units will be delivered during 2014.
Assume Green Bay uses a perpetual inventory system.

Required:
1. Prepare the entry by Green Bay 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 Green Bay to record the delivery of 200 units during 2012. How would the deposit be reported in the financial statements at the end of
2012? Wausau pays in cash upon delivery for units not covered by the deposit.
3. Prepare the entry by Green Bay to record the delivery of 300 units during 2013.


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  • CreatedSeptember 22, 2015
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