On January 1, 2017, Jacob Fashions Inc. enters into a contract with a regional retail company to provide 500 blouses for $20,000 over the next 10 months. On September 1, 2017, after 400 of the blouses had been delivered (50 blouses per month), the contract is modified. Required: a. Fifty blouses were delivered each month for the first 8 months of 2017. Prepare Jacob Fashions' monthly journal entry to record revenue. b. Assume that the contract is modified on September 1 to sell, once the original 500 blouses are delivered, an additional 100 blouses at $35 per blouse, which is the stand-alone selling price on October 1, 2017. The additional blouses are to be delivered in November. Prepare the November journal entry to record the contract modification. c. Assume instead that the contract is modified on September 1 to alter the price of the additional 100 blouses to $35 per blouse, which is the stand-alone selling price on October 1, 2017. Assume the blouses are delivered evenly on September 1 and October 1, 2017. Prepare the journal entries for September and October to record this contract modification.
On January 1, 2017, Jacob Fashions Inc. enters into a contract with a regional retail company to provide 500 blouses for $20,000 over the next 10 months. On September 1, 2017, after 400 of the blouses had been delivered (50 blouses per month), the contract is modified. Required: a. Fifty blouses were delivered each month for the first 8 months of 2017. Prepare Jacob Fashions' monthly journal entry to record revenue. b. Assume that the contract is modified on September 1 to sell, once the original 500 blouses are delivered, an additional 100 blouses at $35 per blouse, which is the stand-alone selling price on October 1, 2017. The additional blouses are to be delivered in November. Prepare the November journal entry to record the contract modification. c. Assume instead that the contract is modified on September 1 to alter the price of the additional 100 blouses to $35 per blouse, which is the stand-alone selling price on October 1, 2017. Assume the blouses are delivered evenly on September 1 and October 1, 2017. Prepare the journal entries for September and October to record this contract modification.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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| On January 1, 2017, Jacob Fashions Inc. enters into a contract with a regional retail company to provide 500 blouses | |||
| for $20,000 over the next 10 months. On September 1, 2017, after 400 of the blouses had been delivered (50 blouses | |||
| per month), the contract is modified. | |||
| Required: | |||
| a. Fifty blouses were delivered each month for the first 8 months of 2017. Prepare Jacob Fashions' monthly | |||
| b. Assume that the contract is modified on September 1 to sell, once the original 500 blouses are delivered, an | |||
| additional 100 blouses at $35 per blouse, which is the stand-alone selling price on October 1, 2017. The | |||
| additional blouses are to be delivered in November. Prepare the November journal entry to record the | |||
| contract modification. | |||
| c. Assume instead that the contract is modified on September 1 to alter the price of the additional 100 blouses to | |||
| $35 per blouse, which is the stand-alone selling price on October 1, 2017. Assume the blouses are delivered | |||
| evenly on September 1 and October 1, 2017. Prepare the journal entries for September and October to record | |||
| this contract modification. | |||
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