Question - On July 1, 2013, the Foster Company sold inventory to the Slate Corporation for $300,000. Terms of the sale called for a down payment of $75,000 and three annual installments of $75,000 due on each July 1, beginning July 1, 2014. Each installment also will include interest on the unpaid balance applying an appropriate interest rate. The inventory cost Foster $120,000. The company uses the perpetual inventory system..
Required:
Prepare the necessary journal entries for 2013 and 2014 using point of delivery revenue recognition. Ignore interest charges.
Prepare the necessary journal entries for 2013 and 2014, applying the installment sales method.
Prepare the necessary journal entries for 2013 and 2014, applying the cost recovery method.