Reference no: EM132745140
Question: Journal entries; point of delivery, installment sales, and cost recovery methods [Appendix]
On July 1, 2016, the Foster Company sold inventory to the Slate Corporation for $180,000. Terms of the sale called for a down payment of $45,000 and three annual installments of $45,000 due on each July 1, beginning July 1, 2017. Each installment also will include interest on the unpaid balance applying an appropriate interest rate. The inventory cost Foster $55,800. The company uses the perpetual inventory system.
Required: 1. Prepare the necessary journal entries for 2016 and 2017 using point of delivery revenue recognition. Ignore interest charges. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Prepare the necessary journal entries for 2016 and 2017, applying the installment sales method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
3. Prepare the necessary journal entries for 2016 and 2017, applying the cost recovery method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)