1. Riverbed Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2020. The goods have a sales price of $630,700 (cost of $500,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $10,700. Past history indicates that the cash discount will be taken. On January 28, 2020, Danone makes payment to Riverbed for the full sales price. a)Prepare the journal entry(ies) to record the sale and related cost of goods sold for Riverbed Company on January 2, 2020, and the payment on January 28, 2020. Assume that Riverbed Company records the January 2, 2020, transaction using the net method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) b)Prepare the journal entry(ies) to record the sale and related cost of goods sold for Riverbed Company on January 2, 2020, and the payment on January 28, 2020. Assume that Riverbed Company records the January 2, 2020, transaction using the gross method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
1. Riverbed Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2020. The goods have a sales price of $630,700 (cost of $500,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $10,700. Past history indicates that the cash discount will be taken. On January 28, 2020, Danone makes payment to Riverbed for the full sales price.
a)Prepare the
b)Prepare the journal entry(ies) to record the sale and related cost of goods sold for Riverbed Company on January 2, 2020, and the payment on January 28, 2020. Assume that Riverbed Company records the January 2, 2020, transaction using the gross method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
(a)Determine the transaction price of the arrangement for Headland Biotech.
(a)Determine the transaction price that Nash Always should compute for this agreement.
4.Concord Company manufactures equipment. Concord’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Concord has the following arrangement with Winkerbean Inc.
| ● | Winkerbean purchases equipment from Concord for a price of $960,000 and contracts with Concord to install the equipment. Concord charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Concord determines installation service is estimated to have a standalone selling price of $47,000. The cost of the equipment is $550,000. | |
| ● | Winkerbean is obligated to pay Concord the $960,000 upon the delivery and installation of the equipment. |
Concord delivers the equipment on June 1, 2020, and completes the installation of the equipment on September 30, 2020. The equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately.
a)How should the transaction price of $960,000 be allocated among the service obligations? (Do not round intermediate calculations. Round final answers to 0 decimal places.)
b)Prepare the journal entries for Concord for this revenue arrangement on June 1, 2020 and September 30, 2020, assuming Concord receives payment when installation is completed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
