BE182 L01 On May 10 2017 Cosmo Co enters into a contract to

BE18-2 (L01) On May 10, 2017, Cosmo Co. enters into a contract to deliver a product to Greig Inc. on June 15, 2017. Greig agrees to pay the full contract price of $2,000 on July 15, 2017. The cost of the goods is $1,300. Cosmo delivers the product to Greig on June 15, 2017 and receives payment on July 15, 2017. Prepare the journal entries for Cosmo related to this contract. Either party may terminate the contract without compensation until one of the parties performs.

Solution

Date General Journal Debit Credit May 10 No entry June 15 Accounts receivable $2,000 Sales revenue $2,000 Cost of goods sold $1,300 Inventory $1,300 July 15 Cash $2,000 Accounts receivable $2,000