AgriFoods, Inc. prepares and delivers agricultural products to industrial-scale kitchens and food service providers. One of its key customers is Home Kitchen & Co., which provides cafeteria solutions for corporations and universities. On January 1, 2018, AgriFoods obtained a one-year contract to supply a pre-specified amount of vegetables to Home Kitchen, and received $600,000 in cash. Then, on March 15, AgriFoods hired Home to run one of its employee cafeterias for a period of six months, from April to September, and paid $70,000 in cash. For similar arrangements, Home usually charged $50,000.
Required:
(a) Prepare the journal entries AgriFoods would record on January 1, 2018 and January 31, 2018 with respect to the sales contract. Assume revenue is accrued on a monthly basis.
(b) Prepare the journal entry to account for AgriFoods' purchase of Home's services.

Question

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The Answer of AgriFoods, Inc. prepares and delivers agricultural products to industrial-scale kitchens and food service providers. One of its key customers is Home Kitchen & Co., which provides cafeteria solutions for corporations and universities. On January 1, 2018, AgriFoods obtained a one-year contract to supply a pre-specified amount of vegetables to Home Kitchen, and received $600,000 in cash. Then, on March 15, AgriFoods hired Home to run one of its employee cafeterias for a period of six months, from April to September, and paid $70,000 in cash. For similar arrangements, Home usually charged $50,000.
Required:
(a) Prepare the journal entries AgriFoods would record on January 1, 2018 and January 31, 2018 with respect to the sales contract. Assume revenue is accrued on a monthly basis.
(b) Prepare the journal entry to account for AgriFoods' purchase of Home's services.