Funastic manufactures imitation fur garments, On June 1, 2016. Furtastic made a sale to Willett's Department Store under terms that require Willett to pay $150,000 to Funastic on June 30, 2016. In a separate transaction on June 15, 2016, Funastic purchased brand advertising services from Willett for $12,000. The fair value of those advertising services is 55,000. Furtastic expects that 3% of all sales will prove uncollectible.
Required:
1. Prepare the journal entry to record Furtastic's sale on June 1. 2016.
2. Prepare the journal entry to record Funastic's purchase of advertising services from Willett on June 15, 2016. Assume all of the advertising services are delivered on June 15. 2016.
3. Prepare the journal entry to record Funastic's receipt of 5150,000 from Willett on June 30, 2016.
4. How would Funasties expectation regarding uncollectible accounts affect its recognition of revenue from the sale to Willett's Department Store on June 1, 2016? Explain briefly.