Question

Economy Appliance Co. manufactures low-price, no-frills appliances that are in great demand for rental units. Pricing and cost information on Economy’s main products are as follows.

Customers can contract to purchase either individually at the stated prices or a three-item bundle with a price of $1,684. The bundle price includes delivery and installation. Economy provides delivery and installation as a standalone service for any of its products for a price of $114.

Respond to the requirements related to the following independent revenue arrangements for Economy Appliance Co.

Question: YellowCard Property Managers operates upscale student apartment buildings. On May 1, 2014, Economy signs a contract with YellowCard for 280 appliance bundles to be delivered and installed in one of its new buildings. YellowCard pays 20% cash at contract signing and will pay the balance upon delivery and installation no later than August 1, 2014.

Prepare journal entries for Economy on May 1, 2014, and August 1, 2014, when all appliances are delivered and installed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

May 1, 2014

Aug. 1, 2014

(To record revenue)

Aug. 1, 2014

(To record cost of goods sold)

Item

 

Standalone

Selling Price (Cost)

Refrigerator

 

$530 ($256)

Range

 

$620 ($258)

Stackable washer/dryer unit

 

$710 ($381)

 

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