A yacht dealer sells high performance yachts to affluent customers. The sale also includes a 90 day warranty against any defects in workmanship. The number of performance obligations for each yacht is ________. Group of answer choices 2 1 4 3
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- Braden Bonnet Technologies manufactures sewing and pressing machines that are used in the manufacture of felt hats. Each machine sold includes a three-year limited warranty that guarantees repairs if the machine should fail. The warranty is an integral part of the sale price and is not considered a separate performance obligation. In 2021, 3,000 machines were sold at a price of $11,000 each. Based on past experience, the company has estimated that the expected value of the warranty repairs will be $600 per machine. Actual repair costs on the machines sold in 2021 were incurred as follows: Year Costs Incurred 2021 $970,000 2022 $340,000 2023 $420,000 Required: a. Prepare all the journal entries to record the sale and warranty transactions for 2021 to 2023. b. Determine the warranty liability balance that will be reported at each year-end from 2021 to 2023. (Ctrl) -Dave Krug finances a new automobile by paying $7,300 cash and agreeing to make 30 monthly payments of $460 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.) Monthly Payment Table Values are Based on: Present Value of Loan n i X = = + Table Factor Cash Down Payment = Present Value of Loan Cost of the AutomobileConsider the following independent situations: For each of these situations, describe the revenue recognition policy that you believe that they should follow, explaining the basis for your recommendation 1. An international health club sells lifetime memberships costing $1,500 which allow the purchaser unlimited use of any of the club's 300 facilities around the world. The initiation fee may be paid in 36 monthly installments, with a two percent interest charge on any unpaid balance. 2. Franklin Motors, Inc., has always offered a limited, 36-month warranty on its cars and trucks, but to counter the significant competition in the industry, the company has come to the conclusion that it must do something more. With that in mind, the company developed a new warranty program: For a $1,500 payment at the time of purchase, a customer can buy a seven-year warranty that will cover replacement of almost all parts and labor. The purchased warranty expires at the end of seven years or when the…
- AS an accountant at City Bank in Boston, Ken, the Loan Officer called you for some help on a loan application that he is working on. One of his customers is looking for a $50,000 loan for a car. He is offering him a 7% 5 year $50,000 loan and asking you to help him calculate the installment amount. This is the data Ken sent you: Face Amount of Loan $50,000 Contract Rate… 7% Term of the Loan….. 5 yearsAuto insurance options offered by AA Auto Insurance are outlined in the table below. What monthly payment would you expect for an insurance polier through A Auto Insurance with the following options? Bodily Injury: S50/100,000 Property Damage: $100,000 Collison: S100 deductible Comprehensive: $100 deductible a.$845 b. $350 c. $7O d. $67TB MC Qu. 8-123 (Algo) Strikers, Incorporated sells soccer goals to customers over the... Basu, Incorporated sells soccer goals to customers over the Internet. History has shown that 2% of Basu's goals will need repair under the warranty program. For the year, Basu has sold 4,100 goals and 50 have been repaired. If the estimated cost to repair a goal is $110, what would be the warranty liability at the end of the year? Multiple Choice $3,570 $3,520 $0 $9,020
- Wilder Watersports Inc. sells luxury yachts and related equipment. The sale price of each yacht includes a three-year comprehensive warranty that covers all repairs and maintenance for the period. Each yacht sells for $3,000,000. A review of competitor pricing indicates that a similar warranty, if sold separately, would be valued at $10,000. On January 1, 2021, Wilder Watersports Inc. sold seven yachts. Repair costs actually incurred for these yachts were as follows: Year ended December 31, 2021 $12,000 Year ended December 31, 2022 $30,000 Year ended December 31, 2023 $35,000 Required: a. Prepare all the necessary journal entries for 2021, 2022, and 2023 to reflect the above transactions. b. Calculate the amount of unearned revenue to be reported at December 31, 202210. A furniture company allows customers to purchase household furnishings with an in-store loan, pay with cash or a credit card, or Rent-To-Own with a lease agreement. A customer chooses furniture worth $3,225.00 including tax and chooses to Rent-To-Own. Rent to Own Furniture Warehouse ● ● No down payment is required. The monthly lease payment is $156.99 for 2 years. a. Calculate the total cost to own the furniture using the Rent-To-Own option. b. What the amount of the finance charge on this purchase? Caza O OM3:TMBSirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded every second month to the radio, and continuous music service for one year from the date the hardware is delivered.Required:Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column with "Not affected".
- Creative Computing sells a laptop computer called the Creative Package to Professor Smith with an extended warranty for $780. The $780 price of a Creative Package includes the following: One laptop Computer A one year basic assurance warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to one year. An agreement that Professor Smith will pay an additional $75 to purchase an extended 1 year warranty. How many performance obligations are included in this sale of the Creative Package? Question 13 options: a) 1 b) 2 c) 3 d) 4Presented below are two independent revenue arrangements for Pharoah Company. Respond to the requirements related to each revenue arrangement. Click here to view factor table. Pharoah sells 3D printer systems. Recently, Pharoah provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Pharoah sells University co-op a 3D system, receiving a $5,100 zero-interest-bearing note on March 1, 2020. The cost of the 3D printer system is $3,060. Pharoah imputes a 8% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on March 1, 2020. (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 O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places, eg. 58,971.) Account Titles and Explanation Debit Credit…Your firm is considering the purchase of equipment from two suppliers. Supplier A requires payment of $5500 today for each machine. Supplier B requires a payment of $5600 in 6-months for each machine. If you earn 5% APR compounded monthly, and if both suppliers deliver the exact same machines today and have same warranty, etc... which supplier is offering the better financial terms to your firm? A) Supplier A because $5500 > $5600 B) Supplier A, because the FV of $5500 is $5638.94 which is greater than $5600 C) Supplier B, because the PV of $5600 is $5462, which is less than $5500 D) Supplier B, because the PV of $5600 is $5462, which is less than $5600
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