Response to the following problem:
Use the following facts of Lilac Corporation to prepare its journal entries relating to the (a) manufacturing of inventory, (b) revenue recognition during production, (c) partial billing, and (d) cash collection.
• The company contracts to produce and sell an item of inventory to a customer for $250. It costs $150 cash to manufacture the item.
• The company sells the item on credit.
• During production, the company bills the customer for a partial billing of $210.
• The company collects $80 cash from the customer in partial payment.
• Assume that the company has not yet delivered the item to its customer, but advances the recognition of revenue to the period of production.