On July 8, Compusoft receives $350,000 from a customer toward a cash sale of $1.00 million for customized computer equipment to be completed on August 1. The remaining $650,000 payment is received upon delivery of the product on August 1. The equipment had a total production cost of $640,000. What journal entries should Compusoft record on July 8 and August 1?

July 8th

cash 350,000

unearned revenue 350,000

August 1st

unearned revenue 350,000

cash 650,000

service revenue 1,000,000

Explanation:

July 8th we have to post for the cash received, the total amount of the sale, may change so we don't record that.

On August 1st the services were performed. We accrued revenue for the whole amount of the contract. We record the cash received and we write-off the unearned revenue because is no more.