Accounting for Consideration Payable Furniture Manufacturer Inc. sells 1,000 chairs to a retailer for $600,000 (with a cost of $360,000) in June. Additionally, Furniture Manufacturer Inc. agrees to pay $6,000 toward an advertising promotion campaign that the retailer will provide. The retailer will provide the advertising electronically and through local print media. The cost for the advertising campaign was negotiated as part of the revenue contract. a. Prepare the entry in June to record Furniture Manufacturer Inc.'s sales revenue and cost of sales, assuming cash collected is net of the advertising fee. b. Prepare the entry in June to record Furniture Manufacturer Inc.'s sales revenue and cost of sales now assuming that $600,000 cash is collected this month. The advertising fee will be paid next month to the customer. • Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero). a. b. Cash Account Name Sales Revenue N/A To record the sale of product Cost of Goods Sold Inventory To record the cost of sales Cash Account Name Consideration Payable Sales Revenue To record the sale of product Cost of Goods Sold Inventory To record the cost of sales Dr. 594,000 0 0 360,000 0 Dr. 600,000 0 0 360,000 0 Cr. 0 594,000 Cr. 0 0 360,000 0 6,000 594,000 0 360,000
Accounting for Consideration Payable Furniture Manufacturer Inc. sells 1,000 chairs to a retailer for $600,000 (with a cost of $360,000) in June. Additionally, Furniture Manufacturer Inc. agrees to pay $6,000 toward an advertising promotion campaign that the retailer will provide. The retailer will provide the advertising electronically and through local print media. The cost for the advertising campaign was negotiated as part of the revenue contract. a. Prepare the entry in June to record Furniture Manufacturer Inc.'s sales revenue and cost of sales, assuming cash collected is net of the advertising fee. b. Prepare the entry in June to record Furniture Manufacturer Inc.'s sales revenue and cost of sales now assuming that $600,000 cash is collected this month. The advertising fee will be paid next month to the customer. • Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero). a. b. Cash Account Name Sales Revenue N/A To record the sale of product Cost of Goods Sold Inventory To record the cost of sales Cash Account Name Consideration Payable Sales Revenue To record the sale of product Cost of Goods Sold Inventory To record the cost of sales Dr. 594,000 0 0 360,000 0 Dr. 600,000 0 0 360,000 0 Cr. 0 594,000 Cr. 0 0 360,000 0 6,000 594,000 0 360,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Accounting for Consideration Payable
Furniture Manufacturer Inc. sells 1,000 chairs to a retailer for $600,000 (with a cost of $360,000) in June. Additionally, Furniture
Manufacturer Inc. agrees to pay $6,000 toward an advertising promotion campaign that the retailer will provide. The retailer will provide
the advertising electronically and through local print media. The cost for the advertising campaign was negotiated as part of the revenue
contract.
a. Prepare the entry in June to record Furniture Manufacturer Inc.'s sales revenue and cost of sales, assuming cash collected is net of the
advertising fee.
b. Prepare the entry in June to record Furniture Manufacturer Inc.'s sales revenue and cost of sales now assuming that $600,000 cash is
collected this month. The advertising fee will be paid next month to the customer.
• Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answers
blank (zero).
a.
b.
Cash
Account Name
Sales Revenue
N/A
To record the sale of product
Cost of Goods Sold
Inventory
To record the cost of sales
Cash
Account Name
Consideration Payable
Sales Revenue
To record the sale of product
Cost of Goods Sold
Inventory
To record the cost of sales
Dr.
594,000
0
0
360,000
360,0
0
Dr.
600,000
0
0
0
Cr.
0
594,000
Cr.
0
0
360,000
0
6,000
594,000
0
360,000
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