An entity sells two products: A and B. Product A sells for $400 and Product...
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Accounting
An entity sells two products: A and B. Product A sells for $400 and Product B sells for $600. If the two products are purchased together, the price for both is $900. Product A is delivered immediately when the customer makes the payment. Product B needs to be ordered and will be delivered to the customer in two months time. The customer pays the whole $900 up front.
Apply steps 4 and 5 of the revenue recognition process to the above transaction. In step 5, write the journal entry the entity would make on the date of sale and the journal entry the entity would make when Product B is delivered to the customer.
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