Naomi Appliance Store is an experienced home appliance dealer. Naomi also offers a number of services together with the home appliances that it sells. Assume that Naomi sells dishwashers on a standalone basis. Naomi also sells installation services and maintenance services for dishwashers. However, Naomi does not offer installation or maintenance services to customers who buy dishwashers from other vendors. Pricing for dishwashers is as follows.   Dishwasher only $1,300 Dishwasher with Installation service   1,550 Dishwasher with maintenance services   1,600 Dishwasher with installation and maintenance services   1,750   In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $300. Additionally, the incremental amount charged by Naomi for installation approximates the amount charged by independent third parties. Dishwashers are sold subject to a general right of return. If a customer purchases a dishwasher with installation and/or maintenance services, in the event Naomi does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $1,300.   Required:   Assume that a customer purchases a dishwasher with both installation and maintenance services for $1,750. Based on its experience, Naomi believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately. Identify the separate performance obligations related to the Naomi revenue arrangement. Indicate the amount of revenue that should be allocated to the dishwasher, the installation, and to the maintenance contract. Prepare the necessary journal entry for Naomi assuming that the delivery and the installation happen at the same time. I need the answer B and C

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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  1. Naomi Appliance Store is an experienced home appliance dealer. Naomi also offers a number of services together with the home appliances that it sells. Assume that Naomi sells dishwashers on a standalone basis. Naomi also sells installation services and maintenance services for dishwashers. However, Naomi does not offer installation or maintenance services to customers who buy dishwashers from other vendors. Pricing for dishwashers is as follows.

 

Dishwasher only

$1,300

Dishwasher with Installation service

  1,550

Dishwasher with maintenance services

  1,600

Dishwasher with installation and maintenance services

  1,750

 

In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $300. Additionally, the incremental amount charged by Naomi for installation approximates the amount charged by independent third parties. Dishwashers are sold subject to a general right of return. If a customer purchases a dishwasher with installation and/or maintenance services, in the event Naomi does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $1,300.

 

Required:

 

  1. Assume that a customer purchases a dishwasher with both installation and maintenance services for $1,750. Based on its experience, Naomi believes that it is probable that the installation of the equipment will be performed satisfactorily to the customer. Assume that the maintenance services are priced separately. Identify the separate performance obligations related to the Naomi revenue arrangement.
  2. Indicate the amount of revenue that should be allocated to the dishwasher, the installation, and to the maintenance contract.
  3. Prepare the necessary journal entry for Naomi assuming that the delivery and the installation happen at the same time.

I need the answer B and C

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