It's A Wonderful Day is an unreleased song recorded on 30 January 1986 at Sunset Sound in Hollywood, California (on the same day as mixing With You, Mia Bocca, G-Spot and Baby, You're A Trip for the Jill Jones album).
The song was included as the third track on the late April 1986 configuration of Dream Factory, and was kept as the third track on the 3 June 1986 configuration, but was replaced by Train on the 18 July 1986 configuration. Engineer Susan Rogers has stated that Prince may have always planned on replacing the track before release, and used it as a placeholder to find a track with a similar feel.
An instrumental portion of the track was included as background music in the Under The Cherry Moon movie, in a scene where Tricky and Christopher Tracy are arguing (See Under The Cherry Moon cues for details).
The sung phrase of "wonderful day / wonderful night" is sung in the same way as "beautiful day / beautiful night" on It's Gonna Be A Beautiful Night (recorded later in 1986), but this is not a direct reference to this song.