Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below August 5, 2015: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
August 27, 2015: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse. September 5, 2015: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.
On September 5, 2015, when the planters are delivered and the balance of $7,000 due from the customer is collected, which one of the following journal entries best reflects the full economic impact of the special order on Turnadot's financial condition?
a. Dr. Cash 7,000, Cr. Revenues 7,000 and Dr. COGS 4,000, Cr. Inventory 4,000
b. Dr. Cash 7,000, Cr. Revenues 7,000 and Dr. Inventory 4,000, Cr. COGS 4,000
c. Dr. Cash 7.000, Dr. Advances from customers (liability) 3,000, Cr. Revenues 10.000 and Dr. COGS 4.000, Cr. Inventory 4.000