BigBoy Equipment Inc. sells heavy-duty forklift trucks. Model 217A has a stand-alone price of $154,000. BigBoy offers to sell the 217A inclusive of a three-year service contract for $198,200. Required: Prepare a journal entry to record the sale of one Model 217A forklift truck plus service contract for $198,200 assuming: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. A comparable service contract is sold separately for $66,000. BigBoy uses the relative stand-alone value method for multiple deliverables. 2. The service contract has a variable stand-alone value ranging from $38,400 to $66,000 and BigBoy uses the residual value method. Viow transaction list 1 Record the sale of Model 217A assuming comparable service contract Is sold separately and using relative falr value method. Is sold 2 Record the sale of Model 217A assuming the service contract has a varlable stand-alone value ranging from $30,000 to $70,000 and BigBoy uses the residual method. Credit Note: = journal entry has been entered Rocord antry Clear antry Viow ganeral journal

BigBoy Equipment Inc. sells heavy-duty forklift trucks. Model 217A has a stand-alone price of $154,000. BigBoy offers to sell the 217A inclusive of a three-year service contract for $198,200. Required: Prepare a journal entry to record the sale of one Model 217A forklift truck plus service contract for $198,200 assuming: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. A comparable service contract is sold separately for $66,000. BigBoy uses the relative stand-alone value method for multiple deliverables. 2. The service contract has a variable stand-alone value ranging from $38,400 to $66,000 and BigBoy uses the residual value method. Viow transaction list 1 Record the sale of Model 217A assuming comparable service contract Is sold separately and using relative falr value method. Is sold 2 Record the sale of Model 217A assuming the service contract has a varlable stand-alone value ranging from $30,000 to $70,000 and BigBoy uses the residual method. Credit Note: = journal entry has been entered Rocord antry Clear antry Viow ganeral journal

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...

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BigBoy Equipment Inc. sells heavy-duty forklift trucks. Model 217A has a stand-alone price of $126,000. BigBoy offers to sell the 217A inclusive of a three-year service contract for $162,100. Required: Prepare a journal entry to record the sale of one Model 217A forklift truck plus service contract for $162,100 assuming: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. A comparable service contract is sold separately for $54,000. BigBoy uses the relative stand-alone value method for multiple deliverables. 2. The service contract has a variable stand-alone value ranging from $31,500 to $54.000 and BigBoy uses the residual value method. View transaction list Journal entry worksheet 2 Record the sale of Model 217A assuming comparable service contract is sold separately and using relative fair value method. Note: Enter debits before credits: Transaction General Journal Debit Credit >
Rahe Corp. sold a customer service contract with a price of $20,000 to Peterson Warehousing. Rahe Corp. offered terms of 2/10, n/30 and expects Peterson to pay within the discount period. Required: Prepare the journal entry to record the sale using the net method. Prepare the journal entry assuming the payment is made within 10 days (within the discount period).
Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for 1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of 200 and 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer 1,400. Required: 1. How should the transaction price be allocated among the products? 2. Prepare the journal entries to recognize revenue related to each product in 2019.
(Allocate Transaction Price) Geraths Windows manufactures and sells custom storm windows for threeseason porches. Geraths also provides installation service for the windows. The installation process does not involve changes in the windows, so this service can be performed by other vendors. Geraths enters into the following contract on July 1, 2017, with a local homeowner. The customer purchases windows for a price of $2,400 and chooses Geraths to do the installation. Geraths charges the same price for the windows irrespective of whether it does the installation or not. Theinstallation service is estimated to have a standalone selling price of $600. The customer pays Geraths $2,000 (which equals the standalone selling price of the windows, which have a cost of $1,100) upon delivery and the remaining balance upon installation of the windows. The windows are delivered on September 1, 2017, Geraths completes installation onOctober 15, 2017, and the customer pays the balance due. Prepare…
Cover Rugs is holding a 2-week carpet sale at Josh’s Club, a local warehouse store. Cover Rugs plans to sell carpets for $950 each. The company will purchase the carpets from a local distributor for $760 each, with the privilege of returning any unsold units for a full refund. Josh’s Club has offered Cover Rugs two payment alternatives for the use of space. ■ Option 1: A fixed payment of $7,410 for the sale period ■ Option 2: 10% of total revenues earned during the sale period Assume Cover Rugs will incur no other costs. Q1. Calculate the breakeven point in units for (a) Option 1 and (b) Option 2. Q2. At what level of revenues will Cover Rugs earn the same operating income under either option? a. For what range of unit sales will Cover Rugs prefer Option 1? b. For what range of unit sales will Cover Rugs prefer Option 2? Q3. Calculate the degree of operating leverage at sales of 65 units for the two rental options. 4. Briefly explain and interpret your answer to requirement 3.
Cullumber Company sells goods on credit that cost $306,500 to Gary Company for $400,500 on January 2, 2025. The sales price includes an installation fee, which has a standalone selling price of $47,000. The standalone selling price of the goods is $353,500. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2025. (Credit account titles are automatically indented when 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. List all debit entries before credit entries.) Date Jan. 2, 2025 Account Titles and Explanation Debit Credit
Curt Rugs is holding a 2-week carpet sale at Jacob's Club, a local warehouse store. Curt Rugs plans to sell carpets for $1000 each. The company will purchase the carpets from a local distributor for $400 each, with the privilege of returning any unsold units for a full refund. Jacob's Club has offered Curt Rugs two payment alternatives for the use of space. Option 1: A fixed payment of $17400 for the sale period Option 2: 20% of total revenues earned during the sale period. Assume Curt Rugs will incur no other costs. Calculate the breakeven point in units for (a) option 1 and (b) option 2. At what level of revenues will CurtRugs earn the same operating income under either option? For what range of unit sales will Curt Rugs prefer Option 1? For what range of unit sales will Curt Rugs prefer Option 2? Calculate the degree of operating leverage at sales of 87 units for the two rental options. Briefly explain and interpret your answer to the above calculation
Accounting Crane Company manufactures equipment. Crane's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $250,000 to $1,510,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Crane has the following arrangement with Winkerbean Inc. Winkerbean purchases equipment from Crane on May 2, 2020, for a price of $988,000 and contracts with Crane to install the equipment. Crane charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Crane determines that the installation service is estimated to have a fair value of $52,000. The cost of the equipment is $800,000. Winkerbean is obligated to pay Crane the $936,000 upon delivery of the equipment and the balance on the completion of the installation Crane delivers the equipment on June 1, 2020, and…
Master Grill Company sells outdoor grilling products, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations. Instructions Respond to the requirements related to the following independent revenue arrangements for Master Grill products and services. (a) Master Grill offers contract MG100 which is comprised of a free-standing gas grill for small patio use plus installation to a customer’s gas line for a total price $950. On a standalone basis, the grill sells for $800 (cost $470), and Master Grill estimates that the fair value of the installation service (based on cost-plus estimation) is $200. Master Grill signed 15 MG100 contracts on May 30, 2018, and customers paid the contract price in cash. The grills were delivered and installed on June 15, 2018. Prepare journal entries for Master Grill for MG100 in May and June 2018. (b) Master Grill sells its specialty combination gas/wood-fired grills to local restaurants. Each grill…
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A. On January 1, 2020, Machinery Corp. enters into a contract with a customer for the sale of a machine and relatedone-yearmaintenance services for a total contract price of P2,000.000. Machinery Corp. regulariy sells these items separately. If they were to be purchased separately, their stand-alone selling prices are as follows: • P1,800,000 for the machine; and P600,000 for the one-year maintenance services Machinery Corp transfesthe machine, andcolects the total contract price, on February 1, 2020. The maintenance services start on that date. Required: Analyze the five steps of model of revenue recognition.
On March 31, Higgins Repair Service extended an offer of 415, 000.00 for the Lathe Machines that has been priced for sale at P500, 000.00. On April 15, Higgins Repair Service accepted the seller’s counteroffer of P437, 000.00. The fair market value of the Lathe Machines as of November 17 is P475, 000.00. At what value should the machineries be recorded in the Higgins Repair Service? Why?