Question

Dana sells White equipment under an arrangement whereby Dana receives cash on February 23, 2021 and delivers the equipment on August 30, 2023. When the cash is received, Dana will record a journal entry that includes:

Answer 1

Answer:

When the cash is received, Dana will record the following  -

Cash (debit)

Deferred Trade Receivable (credit)

Being cash received for equipment to be delivered in future

Explanation:

The summary of the journal entries to record the events is :

February 23, 2021

Cash (debit)

Deferred Trade Receivable (credit)

Being cash received for equipment to be delivered in future

August 30, 2023

Deferred Trade Receivable (debit)

Equipment (credit)

Being equipment delivered

In Both circumstances, the price of the equipment is the value of the transaction