Sunshine offers a contract to Cape Country Club, which is comprised of 10 patio set plus installation for a priceof $2,850 each. On a standalone basis, the patio sets sell for $2,400 (cost $1,410), and Sunshine estimatesthat the fair value of the installation service (based on cost-plus estimation) is $600. The contract was signedon March 21, 2024, and the Country Club paid the contract price in cash. The patio sets were installed on April30, 2024.a) Describe the performance obligations.b) Show the calculations for the transaction price and allocation of the transaction price to the performanceobligations.c) Prepare journal entries for Sunshine for March and April 2024.March 21April 30

The objective of the question is to identify the performance obligations in the contract, calculate…

Answered: Sunshine offers a contract to Cape…

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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Jeff Heun, president of Wildhorse Always, agrees to construct a concrete cart path at Dakota Golf Club. Wildhorse Always enters into a contract with Dakota to construct the path for $233,000. In addition, as part of the contract, a performance bonus of $42,800 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $10,700 per week for every week beyond the agreed-upon completion date. Jeff has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Jeff estimates, given the constraints of his schedule related to other jobs, that there is 55% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 15% probability that he will be 2 weeks late. a.) Determine the transaction…
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