Revenue Recognition-Point of Sale
Response to the following problem:
Shaw Company sells goods that cost $300,000 to Ricard Company for $410,000 on January 2, 2014. The sales price includes an installation fee, which is valued at $40,000. The fair value of the goods is $370,000. The installation is expected to take 6 months.
(a) Prepare the journal entry (if any) to record the sale on January 2, 2014.
(b) Shaw prepares an income statement for the first quarter of 2014, ending on March 31, 2014.
How much revenue should Shaw recognize related to its sale to Ricard?