Economy Appliance Co. manufactures low-price, no-frillsappliances that are in great demand for rental units. Pricing andcost information on Economy's main products are as follows.

Refrigerator $500 ($260) Range $560 ($275) Stackable washer/dryer unit $700 ($400)

Customers can contract to purchase either individually at thestated prices or a three-item bundle with a price of $1,800. Thebundle price includes delivery and installation. Economy providesdelivery and installation as a standalone service for any of itsproducts for a price of $100.

Instructions Respond to the requirements related to thefollowing independent revenue arrangements for Economy ApplianceCo.

(a)

On June 1, 2014, Economy sold 100 washer/dryer units withoutinstallation to Laplante Rentals for $70,000. Laplante is a newercustomer and is unsure how this product will work in its olderrental units. Economy offers a 60-day return privilege andestimates, based on prior experience with sales on this product, 4%of the units will be returned. Prepare the journal entries for thesale and related cost of goods sold on June 1, 2014.

(b)

YellowCard Property Managers operates upscale student apartmentbuildings. On May 1, 2014, Economy signs a contract with YellowCardfor 300 appliance bundles to be delivered and installed in one ofits new buildings. YellowCard pays 20% cash at contract signing andwill pay the balance upon delivery and installation no later thanAugust 1, 2014. Prepare journal entries for Economy on (1) May 1,2014, and (2) August 1, 2014, when all appliances are delivered andinstalled.

(c)

Refer to the arrangement in part (b). It would help YellowCardsecure lease agreements with students if the delivery andinstallation of the appliance bundles can be completed by July 1,2014. YellowCard offers a 10% bonus payment if Economy can completedelivery and installation by July 1, 2014. Economy estimates itschances of meeting the bonus deadline to be 60%, based on a numberof prior contracts of similar scale. Repeat the requirement forpart (b), given this bonus provision. Assume installation iscompleted by July 1, 2014.

(d)

Epic Rentals would like to take advantage of the bundle pricefor its 400-unit project; on February 1, 2014, Economy signs acontract with Epic for delivery and installation of 400 bundles.Under the agreement, Economy will hold the appliance bundles in itswarehouses until the new rental units are ready for installation.Epic pays 10% cash at contract signing. On April 1, 2014, Economycompletes manufacture of the appliances in the Epic bundle orderand places them in the warehouse. Economy and Epic have documentedthe warehouse arrangement and identified the units designated forEpic. The units are ready to ship, and Economy may not sell theseunits to other customers. Prepare journal entries for Economy on(1) February 1, 2014, and (2) April 1, 2014.

Please show work been stuck on this one for two days!