LG Company is a manufacturer fully loaded washing machines. LG promised to deliver 1 dozen of fully loaded washing machines to a newly opened Laundry Shop for a total price of P600,000. The contract contains a clause for free repairs and maintenance for 2 years from date of delivery. The fully loaded washing machines were delivered on Oct. 1, 2019 3. How much revenue from sales of washing machine will LG Company recognize? C. a. P600,000 b. Р300,000 P150,000 d. No sales revenue to be recognized

LG Company is a manufacturer fully loaded washing machines. LG promised to deliver 1 dozen of fully loaded washing machines to a newly opened Laundry Shop for a total price of P600,000. The contract contains a clause for free repairs and maintenance for 2 years from date of delivery. The fully loaded washing machines were delivered on Oct. 1, 2019 3. How much revenue from sales of washing machine will LG Company recognize? C. a. P600,000 b. Р300,000 P150,000 d. No sales revenue to be recognized

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Complete Electronics Inc. sells a point - of -sale computer with a two- year service contract. Complete collects $3,500 cash for the selling price of the computer and $648 for the two - year service contract. How is revenue recognized? O A. Complete will record Sales Revenue of $3.500 when the computer delivered and will record revenue for the service contract as service calls are made. O B. Complete will record Sales Revenue of $2,074 per year for two years. O C. Complete will record Sales Revenue of $4,148 when the computer is delivered to the customer. O D. Complețe will record Sales Revenue of $3,500 when the computer is delivered and Service Revenue of $27 per month for 24 months.
Allocating Transaction Price to Performance Obligations and Recording Sales Value Dealership Inc. markets and sells the vehicles to retail customers. Along with a new vehicle purchase, a customer will receive a free annual maintenance contract for one year from the date of purchase. The standalone selling price of a vehicle is $30,000 and the standalone selling price for the annual maintenance contract is $400. During October 2020, Value Dealership Inc. sold 30 vehicles for $30,250 per vehicle, each with a free annual maintenance contract. When answering the following questions: Round each allocated transaction price to the nearest dollar. If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero). a. Ignoring the cost entries, record the journal entry in October 2020 for Value Dealership’s sale of vehicles with the associated maintenance contracts to customers.…
On February 1, 2019, the telecommunications company sold cellular phones and unlimited calls service to Customer #1 on a 24 month contract. Customer 1 pays CU30 per month for 'free' network and cell phone services. The Company sells Customer #2 the same cellular telephone for CU 150 and the same network services for CU 25 per month. The amount is also the price the company charges when the cellular phone or network service is sold separately. The time value effect of money is negligible in this case. Based on the above case, answer the following questions: How the company recognizes its revenue to Customer #1 and Customer #2? Keep a journal on February 1, 2019 and March 1, 2019
se Of Activity No. 7 Ahmad Taher pays an American supplier QR 25,000 for a machine. Freight costs of 3% and import duties of 10% are also paid. The business pays the German manufacturer an additional 4% to have their engineer install the machine. We also have to pay 1.5% for adjustments to our factory to house the machine. We pay QR 2.5% per year in insurance premiums for the machine, QR 1800 for fuel, an additional QR 570 per year in additional electricity costs. Calculate the cost of asset. Original Cost Freight Import Duties Item Installation costs (Engineer) Installation costs (Construction) Cost of asset Calculations QAR Value 1200 lonigho tripis17 (senigna) 21200 noitollotani (nounizno)) 21205 noitolintani ulov spovip2
Beautiful Company sold a set of washing machine and a dryer for a total contract price of P100,000 on December 15, 2021. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. The washing machine was delivered on December 20, 2021 but the dryer was delivered only on January 5, 2022.1. How many performance obligations are there in the contract? 2. Use the same information in Number 5, how much is the revenue to be recognized in 2021? 3. Use the same information in Number 5, how much is the revenue to be recognized in 2022?
On 27 January 2021, Johnson Engineering Ltd signed a contract to supply a new machine to Yummy Confectionary Ltd for $92,000 (including GST). This includes $75,000 for the machine (excluding GST), $2,000 for delivering and installing the machine (excluding GST) and $3,000 for servicing the machine in 6 months. Johnson Engineering Ltd delivers and installs the machine on 12 February 2021. An invoice for $92,000 is also given to Yummy Confectionary Ltd on this day. Yummy Confectionary Ltd transfers $92,000 to Johnson Engineering Ltd on 21 February 2021 via internet banking. Johnson Engineering Ltd services the machine on 12 August 2021. Required: Prepare journal entries for invoicing of the contract on 12 February 2021 and the servicing of the machine on 12 August 2021. Johnson Engineering Ltd’s General Journal: Date Account Names Debit Credit 12/2/2021 (To record the invoice for contract with…
3....new. //// Metlock Inc. was incorporated in 2019 to operate as a computer software service firm, with an accounting fiscal year ending August 31. Metlock’s primary product is a sophisticated online inventory-control system; its customers pay a fixed fee plus a usage charge for using the system.Metlock has leased a large, Alpha-3 computer system from the manufacturer. The lease calls for a monthly rental of $44,000 for the 144 months (12 years) of the lease term. The estimated useful life of the computer is 15 years.All rentals are payable on the first day of the month beginning with August 1, 2020, the date the computer was installed and the lease agreement was signed. The lease is non-cancelable for its 12-year term, and it is secured only by the manufacturer’s chattel lien on the Alpha-3 system.This lease is to be accounted for as a finance lease by Metlock, and it will be amortized by the straight-line method. Borrowed funds for this type of transaction would cost…
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Allee Corp. is evaluating a revenue arrangement todetermine proper revenue recognition. The contract is forconstruction of 10 speedboats for a contract price of$400,000. The customer needs the boats in its showroomsby February 1, 2018, for the boat purchase season; thecustomer provides a bonus payment of $21,000 if allboats are delivered by the February 1 deadline. The bonusis reduced by $7,000 each week that the boats are deliveredafter the deadline until no bonus is paid if the boatsare delivered after February 15, 2018. Allee frequentlyincludes such bonus terms in it contracts and thus hasgood historical data for estimating the probabilities ofcompletion at different dates. It estimates an equal probability(25%) for each full delivery outcome. Assume thatAllee has limited experience with a construction projecton the same scale as the 10 speedboats. How does thisaffect the accounting for the variable consideration?
Algor Inc. entered into a $975,000 3-year contract to maintain a client's computer system. At the end of the first year, the costs incurred on the contract were $225,000 and it was estimated that a further $520,000 would be incurred over the remaining years of the contract. What is the amount of profit that can be recognized on this contract for the first year? $196,875 $69.463 $421,875 $294.463