EXERCISE 1-5 Wightman WaxWorks Ltd. offers repair and maintenance services for premium turntables and other audio equipment. Service contracts may be purchased for one, two, or three years. Prices are $120 for a one-year contract, $200 for a two-year contract, and $280 for a three-year contract. All contract fees must be paid at the start of the term. In 2021, three sales promotion events occurred that generated sales in the following months: January 2021 July 2021 December 2021 One-year subscription Two-year subseription 17 18 12 20 30 36 24 Three-year subscription Service begins immediately in the month of purchase. No amount of the service contract is refundable. Required: a. Determine the amount of revenue recognized in the year ended December 31, 2021. b. Determine the amount of deferred revenue reported as a current liability at December 31, 30 22 2021. c. Determine the amount of deferred revenue reported as a non-current liability at December 31, 2021.
EXERCISE 1-5 Wightman WaxWorks Ltd. offers repair and maintenance services for premium turntables and other audio equipment. Service contracts may be purchased for one, two, or three years. Prices are $120 for a one-year contract, $200 for a two-year contract, and $280 for a three-year contract. All contract fees must be paid at the start of the term. In 2021, three sales promotion events occurred that generated sales in the following months: January 2021 July 2021 December 2021 One-year subscription Two-year subseription 17 18 12 20 30 36 24 Three-year subscription Service begins immediately in the month of purchase. No amount of the service contract is refundable. Required: a. Determine the amount of revenue recognized in the year ended December 31, 2021. b. Determine the amount of deferred revenue reported as a current liability at December 31, 30 22 2021. c. Determine the amount of deferred revenue reported as a non-current liability at December 31, 2021.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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AE 16.LEARNING MODULE-4...
Gross employee pay, December 10 - 24
73,000
Income tax withheld from employees
19,000
Government pension withheld from employees
1,000
Additional government pension to be paid by employer
The new payroll clerk also determined that no year-end accrual had been made for the payroll
from December 25 to 31. The clerk has determined that the pay for this period should be accrued at
the same rate as the previous pay period.
1,200
Required:
Record the journal entry to correcet the December 24 payroll amounts.
b. Record the journal entry to accrue the payroll amount from December 25 to 31.
EXERCISE 1-5
Wightman WaxWorks Ltd. offers repair and maintenance services for premium turntables and
other audio equipment. Service contracts may be purchased for one, two, or three years. Prices are
$120 for a one-year contract, $200 for a two-year contract, and $280 for a three-year contract. All
contract fees must be paid at the start of the term. In 2021, three sales promotion events occurred that
generated sales in the following months:
January 2021
July 2021
December 2021
One-year subscription
Two-year subscription
17
18
12
24
20
30
Three-year subscription.
30
22
36
Service begins immediately in the month of purchase. No amount of the service contract is
refundable.
Required:
a. Determine the amount of revenue recognized in the year ended December 31, 2021.
b. Determine the amount of deferred revenue reported as a current liability at December 31,
2021.
c. Determine the amount of deferred revenue reported as a non-current liability at December 31,
2021.
EXERCISE 1-6
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
Required:
a. Prepare all the necessary journal entries for 2021, 2022, and 2023 to reflect the above
transactions.
$35,000
b. Calculate the amount of unearned revenue to be reported at December 31, 2022.
Date Developed
April 2020
Document No.
Issued by:
CAGAYAN STATE UNIVERSITY
Module in
Intermediate Accounting 1
23
Developed by:
Senador V. Dela Cruz, CPA
Patrocinio Abad, CPA
Revision No. 00
EXERCISE 1–7
Lofft Furniture Mfg. currently employs 10 people on its assembly line, each of whom earn $160
per day. Each employee is entitled to 15 days of vacation per year and one sick day per month. Vacation
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