Financial Reporting

Shaw Company sells goods that cost $286,000 to Ricard Company for $380,000 on January 2, 2014. The sales price includes an installation fee, which is valued at $35,000. The fair value of the goods is $345,000. The installation is expected to take 6 months.

(a) Prepare the journal entry to record the sale on January 2, 2014.


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2. Wood-Mode Company is involved in the design, manufacture, and installation of various types of wood products for large construction projects. Wood-Mode recently completed a large contract for Stadium Inc., which consisted of building 35 different types of concession counters for a new soccer arena under construction. The terms of the contract are that upon completion of the counters, Stadium would pay $2,284,000. Unfortunately, due to the depressed economy, the completion of the new soccer arena is now delayed. Stadium has therefore asked Wood-Mode to hold the counters at its manufacturing plant until the arena is completed. Stadium acknowledges in writing that it ordered the counters and that they now have ownership. The time that Wood-Mode Company must hold the counters is totally dependent on when the arena is completed. Because Wood-Mode has not received additional progress payments for the arena due to the delay, Stadium has provided a deposit of $430,000.


Prepare the journal entry that Wood-Mode should make, assuming it signed a valid sales contract to sell the counters and received at the time of sale the $430,000 payment


Uddin Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point, and payment is due 64 days after shipment. The retailer may return a maximum of 29% of an order at the retailer’s expense. Sales are made only to retailers who have good credit ratings. Past experience indicates that the normal return rate is 11%, and the average collection period is 76 days.


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In late July, Uddin shipped books invoiced at $15,500,000. Prepare the journal entry to record this event that best conforms to GAAP.