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Question: P18-3 (LO2,3,4) (Allocate Transaction Price, Discounts, Time Value) Grill Master Company sells total outdoor grilling solutions, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations.

Instructions

Respond to the requirements related to the following independent revenue arrangements for Grill Master products and services.

2017 and enters into a contract with Grill Master to purchase 400 durable, easy maintenance, standard charcoal grills during 2017. The grills are priced at \(200 each (with a cost of \)160 each), and Grill Master provides a 6% volume discount if Kentucky purchases at least 300 grills during 2017. On April 17, 2017, Grill Master delivered and received payment for 280 grills. Based on prior experience with the State of Kentucky renovation projects, the delivery of this many grills makes it certain that Kentucky will meet the discount threshold. Prepare the journal entries for Grill Master for grills sold on April 17, 2017. Assume the company records sales transaction net.

Step by step solution

01

Definition of Revenue

A line item of the income statement reflecting the benefits earned by the business entity from its operations is known as revenue.

02

Journal entries

Date	Accounts and Explanation	Debit $	Credit $
17 April 2017	Cash	$52,640
	Sales revenue		$52,640
17 April 2017	Cost of goods sold	$44,800
	Inventory		$44,800
		$97,440	$97,440

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