Exercise 6-8 (Algo) Performance obligations; customer option for additional goods or services [LO6-4, 6-5]On May 1, 2021, Meta Computer, Inc., enters into a contract to sell 4,500 units of Comfort Office Keyboard to one of its clients, Bionics,Inc., at a fixed price of $76,500, to be settled by a cash payment on May 1. Delivery is scheduled for June 1, 2021. As part of thecontract, the seller offers a 25% discount coupon to Bionics for any purchases in the next six months. The seller will continue to offer a5% discount on all sales during the same time period, which will be available to all customers. Based on experience, Meta Computerestimates a 50% probability that Bionics will redeem the 25% discount voucher, and that the coupon will be applied to $45,000 ofpurchases. The stand-alone selling price for the Comfort Office Keyboard is $19.00 per unit.Required:1. How many performance obligations are in this contract?2. Prepare the journal entry that Meta would record on May 1, 2021.3. Assume the same facts and circumstances as above, except that Meta gives a 5% discount option to Bionics instead of 25%. In thiscase, what journal entry would Meta record on May 1, 2021?Complete this question by entering your answers in the tabs below.Required 1Required 2 Required 3How many performance obligations are in this contract?Number of performance obligationsRequired 1Required 2 >

Introduction: - Journal entry is the first stage of accounting process. Journal entry used to record…

Required: 1. How many performance obligations are in this contract? 2. Prepare the journal entry that Meta would record on May 1, 2021. 3. Assume the same facts and circumstances as above, except that Meta gives a 5% discount option to Bionics instead of 25%. In this case, what journal entry would Meta record on May 1, 2021?

Required: 1. How many performance obligations are in this contract? 2. Prepare the journal entry that Meta would record on May 1, 2021. 3. Assume the same facts and circumstances as above, except that Meta gives a 5% discount option to Bionics instead of 25%. In this case, what journal entry would Meta record on May 1, 2021?

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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Exercise 15-17 (Algo) Lessee and lessor; operating lease [LO15-4] On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $14,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $99,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the…
Exercise 15-17 (Algo) Lessee and lessor; operating lease [LO15-4] On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $18,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $106,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1) Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2) Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of…
Exercise 15-17 (Algo) Lessee and lessor; operating lease [LO15-4] On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two- year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. . The contract calls for four rent payments of $20,000 each, payable semiannually on June 30 and December 31 each year. • The computers were acquired by ComputerWorld at a cost of $110,000 and were expected to have a useful life of eight years with no residual value. . Both firms record amortization and depreciation semiannually. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first…
Current Attempt in Progress Cullumber Company sells goods that cost $295,000 to Mark Company for $415,000 on January 2, 2023. The sales price includes an installation fee, which is valued at $39,100. The fair value of the goods is $385,900. The goods were delivered on March 1, 2023. Installation is considered a separate performance obligation and was completed on June 18, 2023. Under the terms of the contract, Mark pays Cullumber $267,000 on delivery of the goods and the balance at the completion of the installation. (a) Using the five-step process for revenue recognition, determine when and how much revenue would be recognized by Cullumber. Assume IFRS is followed. (Round percentage allocations to 2 decimal places, 15.25% and final answers to O decimal places, e.g. 5,275.) Performance Obligation Deliver goods Installation Total eTextbook and Media List of Accounts Save for Later When? $ $ How much? Attempts: 0 of 2 used Submit Answer (b) The parts of this question must be completed in…
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Problem 6-11 (Algo) Long-term contract; revenue recognition upon completion [LO6-9] In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year. 2021 $1,584,000 5,616,000 1,200,000 1,000,000 Cost incurred during the year Estimated costs to complete as of year-end) 2022 $3,240,000 2,376,000 3,624,000 2,800,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred). Cost incurred during the…
Zoro Company enters into a contract to sell Product A and Product B on July 1, 2020 for an upfront cash payment of P250,000. Product A will be delivered at the end of the year, and Product B will be delivered the following year. Zoro Company sells Product A for P80,000 and Product B for P240,000. 1. How many performance obligations are there in the contract? 2.what is the transaction price? 3.how much is revenue to be recognized in 2020? 4. how much is revenue to be recognized in 2021?
Problem 6-10 (Algo) Long-term contract; revenue recognition over time [LO6-8, 6-9] [The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Balance Sheet (Partial) Current assets: Accounts receivable Construction in progress Problem 6-10 (Algo) Part 3 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round intermediate calculations.) Less: Billings Costs and profit in excess of billings Current liabilities: Construction in progress Answer is complete but not entirely…
Problem 6-10 (Algo) Long-term contract; revenue recognition over time [LO6-8, 6-9] [The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Costs incurred during the year Estimated costs to complete as of year-end Revenue Gross profit (loss) 2021 2022 $2,044,000 $2,628,000 5,256,000 2,628,000 2,170,000 2,502,000 1,885,000 2,600,000 Problem 6-10 (Algo) Part 5 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate…
Problem 6-10 (Algo) Long-term contract; revenue recognition over time [LO6-8, 6-9] [The following information applies to the questions displayed below.] In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Problem 6-10 (Algo) Part 3 Westgate recognizes revenue over time according to percentage of completion. Balance Sheet (Partial) Current assets: Accounts receivable Construction in progress 2021 $2,044,000 5,256,000 2,170,000 1,885,000 Less: Billings Costs and profit in excess of billings Current liabilities: Construction in progress 2021 2022 $2,628,000 2,628,000 2,502,000 2,600,000 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items…
S Exercise 15-3 (Algo) Finance lease; lessee; balance sheet and income statement effects [LO15-2] On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $604,152 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $4.10 million. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Determine the present value of the lease payments on June 30, 2024 that Georgia-Atlantic uses to record the right-of-use asset and lease liability. 2. What amount related to the lease would Georgia-Atlantic report in…