ZARA University contract: Contract Price: Units Price Contract Price Step 1: Step 2: Step 3: Delivery date January February March Later 905 655 592,775 Contract exists Only 1 performance obligation Determine the transaction price - variable consideration Bonus Consideration Probability 4% 3% 2% 0% 616,486 610,558 604,631 592,775 It is 55% likely that the revenue will be reversed, so it is constrained. Transaction Price (constrained) Transaction Price per scooter Estimated Bonus per scooter Step 4: 610,558 674.65 19.65 45% 40% 10% 5% 100% Only 1 performance obligation, so no allocation 277,41 244,22 60,46 29.63 611,74
ZARA University contract: Contract Price: Units Price Contract Price Step 1: Step 2: Step 3: Delivery date January February March Later 905 655 592,775 Contract exists Only 1 performance obligation Determine the transaction price - variable consideration Bonus Consideration Probability 4% 3% 2% 0% 616,486 610,558 604,631 592,775 It is 55% likely that the revenue will be reversed, so it is constrained. Transaction Price (constrained) Transaction Price per scooter Estimated Bonus per scooter Step 4: 610,558 674.65 19.65 45% 40% 10% 5% 100% Only 1 performance obligation, so no allocation 277,41 244,22 60,46 29.63 611,74
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![ZARA University contract:
Contract Price:
Units
Price
Contract Price
Step 1:
Step 2:
Step 3:
Delivery date
January
February
March
Later
905
655
592,775
Step 4:
Contract exists
Only 1 performance obligation
Determine the transaction price - variable consideration
Bonus Consideration Probability
4%
3%
2%
0%
It is 55% likely that the revenue will be reversed, so it is constrained.
Transaction Price (constrained)
Transaction Price per scooter
Estimated Bonus per scooter
616,486
610,558
604,631
592,775
610,558
674.65
19.65
45%
40%
10%
5%
100%
Only 1 performance obligation, so no allocation
277,419
244,223
60,463
29,639
611,744](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe6a5b2ea-3082-4e2b-bcca-57aa372d1975%2Fbf485fec-ef20-4a0a-a31e-2ccf3d6c46c3%2F1g1f5yn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ZARA University contract:
Contract Price:
Units
Price
Contract Price
Step 1:
Step 2:
Step 3:
Delivery date
January
February
March
Later
905
655
592,775
Step 4:
Contract exists
Only 1 performance obligation
Determine the transaction price - variable consideration
Bonus Consideration Probability
4%
3%
2%
0%
It is 55% likely that the revenue will be reversed, so it is constrained.
Transaction Price (constrained)
Transaction Price per scooter
Estimated Bonus per scooter
616,486
610,558
604,631
592,775
610,558
674.65
19.65
45%
40%
10%
5%
100%
Only 1 performance obligation, so no allocation
277,419
244,223
60,463
29,639
611,744
![Please list all of the journal entries for 2022 the ZARA
UNIVERSITY Contract. Your company name is PP. See below
information:
On December 1, PP signed a contract with ZARA University to
provide them with 905 scooters, at a price of $655 each. ZARA
University chose not to purchase the additional maintenance
service. Because PP had a great sales year, they did not have any
scooters in stock on December 1.
ZARA University offered a bonus plan for early delivery.
They will pay a 4% bonus if all scooters are delivered by the end
of January, 3% if all scooters are delivered by the end of February,
and 2% if all scooters are delivered by the end of March.
It believes that it is 45% likely that it can deliver the remaining
scooters in January, 40% likely that it will deliver them in
February, 10% likely that it will deliver them in March, and 5%
likely it will deliver them in April.
PP delivered and was paid for 195 scooters during the month of
December.
Hint: Consider using the "Estimated Bonus" account.
The analysis of the first four steps in the revenue recognition
process are below:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe6a5b2ea-3082-4e2b-bcca-57aa372d1975%2Fbf485fec-ef20-4a0a-a31e-2ccf3d6c46c3%2F5lso1ns_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Please list all of the journal entries for 2022 the ZARA
UNIVERSITY Contract. Your company name is PP. See below
information:
On December 1, PP signed a contract with ZARA University to
provide them with 905 scooters, at a price of $655 each. ZARA
University chose not to purchase the additional maintenance
service. Because PP had a great sales year, they did not have any
scooters in stock on December 1.
ZARA University offered a bonus plan for early delivery.
They will pay a 4% bonus if all scooters are delivered by the end
of January, 3% if all scooters are delivered by the end of February,
and 2% if all scooters are delivered by the end of March.
It believes that it is 45% likely that it can deliver the remaining
scooters in January, 40% likely that it will deliver them in
February, 10% likely that it will deliver them in March, and 5%
likely it will deliver them in April.
PP delivered and was paid for 195 scooters during the month of
December.
Hint: Consider using the "Estimated Bonus" account.
The analysis of the first four steps in the revenue recognition
process are below:
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education