Accounting for Consideration Payable Furniture Manufacturer Inc. sells 1,000 chairs to a retailer for $400,000 (with a cost of $240,000) in June 2020. Additionally, Furniture Manufacturer Inc. agrees to pay $4,000 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 for June 2020 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 2020 to record Furniture Manufacturer Inc.'s sales revenue and cost of sales now assuming that $500,000 cash is collected this month. The advertising fee will be paid next month to the customer. Note: If a journal entry (or a line of 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. Account Name Dr. Cr. Sales Revenue To record the sale of product. To record the cost of sales. b. Account Name Dr. Cr. Sales Revenue To record the sale of product. 0 x To record the cost of sales.
Accounting for Consideration Payable Furniture Manufacturer Inc. sells 1,000 chairs to a retailer for $400,000 (with a cost of $240,000) in June 2020. Additionally, Furniture Manufacturer Inc. agrees to pay $4,000 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 for June 2020 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 2020 to record Furniture Manufacturer Inc.'s sales revenue and cost of sales now assuming that $500,000 cash is collected this month. The advertising fee will be paid next month to the customer. Note: If a journal entry (or a line of 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. Account Name Dr. Cr. Sales Revenue To record the sale of product. To record the cost of sales. b. Account Name Dr. Cr. Sales Revenue To record the sale of product. 0 x To record the cost of sales.
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 $400,000 (with a cost of $240,000) in June 2020. Additionally, Furniture Manufacturer Inc. agrees to pay $4,000 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 for June 2020 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 2020 to record Furniture Manufacturer Inc.'s sales revenue and cost of sales now assuming that $500,000 cash is collected this month. The advertising fee will be paid next month to the customer.
Note: If a journal entry (or a line of 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.
Account Name
Dr.
Cr.
0 x
Sales Revenue
To record the sale of product.
0 x
To record the cost of sales.
b.
Account Name
Dr.
Cr.
Sales Revenue
To record the sale of product.
To record the cost of sales.
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