Accounting for made to order and selling dresses

[LYNNE]

I have a client who's business is engaged in made to order wedding dress. The customer will sign into a contract with a customised design of dress and will be rented out for her as first wear. The payment will be in installment basis until the gown is finished. After the wedding, the gown will be returned back and displayed for sale.

How will I account the installment payments? Is it considered as rent income and recognized revenue upon sale?
What about the inventory?

Thank you for your help.

 

[atakmaz]

For the installment payments from the customer:
Cash X
Unearned Revenue (X)

When the gown is transferred to customer, recognize the revenue:
Unearned Revenue X
Rental Revenue (X)

Leased assets are depreciated and when the dress is returned and put up for sale, reclassify it to inventory. Then when sold, remove the inventory and book Cost of Goods sold and Revenue.