Gamma Traders (GT) enters into a 1-year contract with a customer to supply standard capacity UPS...

   

  

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Gamma Traders (GT) enters into a 1-year contract with a customer to supply standard capacity UPS for office use. The contract states that price per UPS will be adjusted retroactively once customer reaches certain sale volume as follows: Cumulative annual sales (UPS) Price (Rs.) 0-500 501-800 801 and above 3,500 Based on past experience and knowledge of customer, GT estimates that sales volume for the year will be 610 UPS. At the end of first month, customer purchased 130 UPS at a price of Rs. 5,000 per UPS. 5,000 4,000 Required: Journal entry to record first month sale. Using the same situation as in Question 16, at the end of 2nd month customer purchased 300 units at a price of Rs. 5,000 per UPS. Now GT estimates that cumulative sale volume for the year will be 850 UPS. Required: Journal entry to record 2nd month sale. Gamma Traders (GT) enters into a 1-year contract with a customer to supply standard capacity UPS for office use. The contract states that price per UPS will be adjusted retroactively once customer reaches certain sale volume as follows: Cumulative annual sales (UPS) Price (Rs.) 0-500 501-800 801 and above 3,500 Based on past experience and knowledge of customer, GT estimates that sales volume for the year will be 610 UPS. At the end of first month, customer purchased 130 UPS at a price of Rs. 5,000 per UPS. 5,000 4,000 Required: Journal entry to record first month sale. Using the same situation as in Question 16, at the end of 2nd month customer purchased 300 units at a price of Rs. 5,000 per UPS. Now GT estimates that cumulative sale volume for the year will be 850 UPS. Required: Journal entry to record 2nd month sale.

Answer rating: 100% (QA)

Journal entries are as follows First Month Sale Debit Accou... View the full answer