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On January 1, 2017, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson...

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Accounting

On January 1, 2017, Fulton Inc. enters into a contract withGibson to deliver goods. Gibson pays $100,000 at the time thecontract is signed, at which time the goods are transferred andFulton’s performance obligation is complete. In addition, Gibsonagrees to pay Fulton $100,000 on December 31, 2017, and December31, 2018. If Fulton entered into a financing arrangement withGibson it would charge an interest rate of 9%.

Required:

1. Determine the transaction price for the contract withGibson.

Transaction price $ _______

2. Prepare the journal entries to record Fulton’s sales revenueon January 1 and interest revenue on December 31.

Answer & Explanation Solved by verified expert
4.0 Ratings (477 Votes)
Hey thereIn this question we have to determine the transaction price asper revenue recognition principles and also prepare    See Answer
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