Answered: Using the five-step process for revenue…

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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Ivanhoe Company sells goods that cost $250,000 to Bridgeport Company for $400,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $41,000. The fair value of the goods is $369,000. The goods were delivered on March 1, 2020. Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Bridgeport Company pays Ivanhoe $261,000 upon delivery of the goods and the balance at the completion of the installation.

Using the five-step process for revenue recognition, determine when and how much revenue would be recognized by Ivanhoe. Assume IFRS is followed. (Round percentage allocations to 2 decimal places, 15.25 and final answers to 0 decimal places, e.g. 5,275.)

Performance Obligation	When?	How much?
Deliver goods	choose a transaction date January 2, 2020March 1, 2020June 18, 2020	$enter a dollar amount rounded to 0 decimal places
Installation	choose a transaction date January 2, 2020March 1, 2020June 18, 2020	enter a dollar amount rounded to 0 decimal places
Total		$enter a total amount rounded to 0 decimal places

Prepare the journal entries for Ivanhoe on January 2, March 1, and June 18, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Account Titles and Explanation

Debit

Credit

choose a transaction date June 18, 2020January 2, 2020March 1, 2020

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

choose a transaction date June 18, 2020March 1, 2020January 2, 2020

enter an account title to record sales

enter a debit amount

enter a credit amount

enter an account title to record sales

enter a debit amount

enter a credit amount

enter an account title to record sales

enter a debit amount

enter a credit amount

(To record sales)

choose a transaction date March 1, 2020June 18, 2020January 2, 2020

enter an account title to record cost of goods sold

enter a debit amount

enter a credit amount

enter an account title to record cost of goods sold

enter a debit amount

enter a credit amount

(To record cost of goods sold)

choose a transaction date January 2, 2020March 1, 2020June 18, 2020

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

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