Question

On May 1, 2020, Sheffield Company enters into a contract to transfer a product to Eric Company on September 30, 2020. It is agreed that Eric will pay the full price of $24,040 in advance on June 15, 2020. Eric pays on June 15, 2020, and Sheffield delivers the product on September 30, 2020. Prepare the journal entries required for Sheffield in 2020.

Answer 1

Answer: Please see answer in explanation column

Explanation:

Date              Account titles and explanation           Debit                Credit

May 1st, 2020                 NO ENTRY                                   NO ENTRY

2. Journal to record payment for product on June 15

Date              Account titles and explanation           Debit                Credit

June 15, 2020                  Cash                                  $24,040

Unearned Sales Revenue                                                                  $24,040

3. Journal to record delivery of  product on  September 30

Date              Account titles and explanation           Debit                Credit

September 30, 2020    Unearned Sales Revenue        $24,040

                                           Sales Revenue                                            $24,040