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Entity A is a Hong Kong-based limited company that participates in the building material industry for many years. It sells high-quality raw materials to different local and foreign manufacturers. Entity B is one of its loyal customers for more than 30 years.

On 1 January 2020, Entity A received an advanced payment of $3,600,000 from Entity B through the Hong Kong City Bank for selling Material X. According to the contract terms, Entity A would only deliver Material X to Entity B on 31 December 2020. The regular cash-selling price of Material X was $3,600,000. The cost of sales of Material X was $2,563,000.

On 1 January 2021, Entity A entered into another contract with Entity B. This contract stated that Entity A was required to transfer Material Y and Material Z to Entity B in exchange for $681,500. According to the contract terms, Entity A could invoice this full amount on 31 January 2021. Material Y was to be delivered on 28 February 2021 and Material Z was to be delivered on 31 March 2021. Both promises to transfer Material Y and Material Z were identified as separate performance obligations. The amount of $256,000 was allocated to Material Y and $425,500 to Material Z. The cost of sales of Material Y and Material Z were 70% and 80% of their selling prices respectively. Entity A received a crossed cheque from Entity B of Material Y and Material Z on 30 April 2021.

The market interest rate for the year 2020 and 2021 were 5.5% and 6.5% respectively. Entity A adopts a perpetual inventory system for keeping its inventory accounting records. Entity A recognises revenue when control of each material transfers to Entity B.

REQUIRED:

Provide journal entries for Entity A from 1 January 2020 to 30 April 2021 under relevant accounting standards.

ACCOUNTS FOR INPUT:

| Bank | Payable | Receivable | Interest expense | Interest revenue | Inventory | PPE |

| Asset for product to be returned | Commission expense | Commission revenue | Revenue |

| Cost of sales | Contract asset | Contract liability | Retained earnings | No entry |

ANSWERS:

Journal Entries:

Date	Account Name	Debit ($)	Credit ($)	Hints For Sequence
1-Jan-20	Blank 1	Blank 2
	Blank 3		Blank 4
31-Dec-20	Blank 5	Blank 6
	Blank 7	Blank 8		Judge Dr/Cr side
	Blank 9	Blank 10		Judge Dr/Cr side
	Blank 11	Blank 12		Judge Dr/Cr side
	Blank 13	Blank 14		Judge Dr/Cr side
	Blank 15	Blank 16		Judge Dr/Cr side
1-Jan-21	Blank 17	Blank 18
	Blank 19		Blank 20
31-Jan-21	Blank 21	Blank 22
	Blank 23		Blank 24
28-Feb-21	Blank 25	Blank 26
	Blank 27	Blank 28		Judge Dr/Cr side
	Blank 29	Blank 30		Judge Dr/Cr side
	Blank 31	Blank 32		Judge Dr/Cr side
31-Mar-21	Blank 33	Blank 34
	Blank 35	Blank 36		Judge Dr/Cr side
	Blank 37	Blank 38		Judge Dr/Cr side
	Blank 39	Blank 40		Judge Dr/Cr side

30-Apr-21	Blank 41	Blank 42
	Blank 43		Blank 44

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