On December 30, Shady Company segregated goods costing $530,000 for future shipment to one of its customers, Point Company. Point was billed $890,000. Make the journal entry necessary on Shady’s books to record this action in each of the following situations. Treat each situation independently.
(a) Point is a regular customer, and Shady has been expecting an order for the past two weeks. To make sure that sufficient goods are available when the order from Point finally does come, Shady has segregated the goods.
(b) Normal procedure is for the purchasing agent for Point to sign a formal sales agreement as part of each purchase. That agreement is then countersigned by Shady’s sales manager. The segregation of goods was arranged over the phone; Shady plans to take care of the formal paperwork next week.
(c) Point has requested, in writing, that Shady segregate the goods. Point is conducting temporary repairs to its storage warehouse, so Point has arranged to make its shipments directly from Shady’s warehouse for the duration of the repairs. The goods have been carefully separated so that Shady employees don’t accidentally ship them to another customer.
(d) The sales agreement between Shady and Point requires that all goods be subjected to a quality control test by Point engineers. That quality control test is not expected to occur until early January.