On January 1, 2017, Jacob Fashions Inc. enters into a contract with a regional retail company to provide 500 blousesfor $20,000 over the next 10 months. On September 1, 2017, after 400 of the blouses had been delivered (50 blousesper month), the contract is modified. Required: a. Fifty blouses were delivered each month for the first 8 months of 2017. Prepare Jacob Fashions' monthlyjournal entry to record revenue. b. Assume that the contract is modified on September 1 to sell, once the original 500 blouses are delivered, anadditional 100 blouses at $35 per blouse, which is the stand-alone selling price on October 1, 2017. Theadditional blouses are to be delivered in November. Prepare the November journal entry to record thecontract modification. c. Assume instead that the contract is modified on September 1 to alter the price of the additional 100 blouses to$35 per blouse, which is the stand-alone selling price on October 1, 2017. Assume the blouses are deliveredevenly on September 1 and October 1, 2017. Prepare the journal entries for September and October to recordthis contract modification.

Journal is one of the basic books in which transactions are recorded in the order in which, they…

Answered: On January 1, 2017, Jacob Fashions Inc.…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 21E

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On January 1, 2017, Jacob Fashions Inc. enters into a contract with a regional retail company to provide 500 blouses
for $20,000 over the next 10 months. On September 1, 2017, after 400 of the blouses had been delivered (50 blouses
per month), the contract is modified.

Required:
a. Fifty blouses were delivered each month for the first 8 months of 2017. Prepare Jacob Fashions' monthly
journal entry to record revenue.

b. Assume that the contract is modified on September 1 to sell, once the original 500 blouses are delivered, an
additional 100 blouses at $35 per blouse, which is the stand-alone selling price on October 1, 2017. The
additional blouses are to be delivered in November. Prepare the November journal entry to record the
contract modification.

c. Assume instead that the contract is modified on September 1 to alter the price of the additional 100 blouses to
$35 per blouse, which is the stand-alone selling price on October 1, 2017. Assume the blouses are delivered
evenly on September 1 and October 1, 2017. Prepare the journal entries for September and October to record
this contract modification.

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