Performance obligation: Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract. Variable consideration: Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events. Deferred revenues: Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit , all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

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Answer 1

Question

Chapter 5, Problem 5.5P

Requirement – 1

To determine

Performance obligation:

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

Variable consideration:

Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.

Deferred revenues:

Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

Requirement – 2

To determine

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

Requirement – 3

To determine

To prepare: The journal entry on June 30 to record payment of the penalty.

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Maharaj Garage & Car Supplies sells a variety of automobile cleaning gadgets including a variety of hand vacuums. The business began the first quarter (January to March) of 2024 with 20 (Mash up Dirt) deep clean, cordless vacuums at a total cost of $126,800. During the quarter, the business completed the following transactions relating to the "Mash up Dirt" brand. January 8 January 31 February 4 February 10 February 28 March 4 March 10 March 31 March 31 105 vacuums were purchased at a cost of $6,022 each. In addition, the business paid a freight charge of $518 cash on each vacuum to have the inventory shipped from the point of purchase to their warehouse. The sales for January were 85 vacuums which yielded total sales revenue of $768,400. (25 of these units were sold on account to Mandys Cleaning Supplies, a longstanding customer) A new batch of 65 vacuums was purchased at a total cost of $449,800 8 of the vacuums purchased on February 4 were returned to the supplier, as they were…

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Answer 2

Question

Chapter 5, Problem 5.5P

Requirement – 1

To determine

Performance obligation:

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

Variable consideration:

Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.

Deferred revenues:

Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

Requirement – 2

To determine

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

Requirement – 3

To determine

To prepare: The journal entry on June 30 to record payment of the penalty.

Expert Solution & Answer

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Answer 3

Question

Chapter 5, Problem 5.5P

Requirement – 1

To determine

Performance obligation:

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

Variable consideration:

Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.

Deferred revenues:

Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

Requirement – 2

To determine

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

Requirement – 3

To determine

To prepare: The journal entry on June 30 to record payment of the penalty.

Expert Solution & Answer

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Answer 4

Question

Chapter 5, Problem 5.5P

Requirement – 1

To determine

Performance obligation:

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

Variable consideration:

Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.

Deferred revenues:

Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

Requirement – 2

To determine

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

Requirement – 3

To determine

To prepare: The journal entry on June 30 to record payment of the penalty.

Expert Solution & Answer

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Answer 5

Chapter 5, Problem 5.5P

Requirement – 1

To determine

Performance obligation:

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

Variable consideration:

Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.

Deferred revenues:

Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

Requirement – 2

To determine

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

Requirement – 3

To determine

To prepare: The journal entry on June 30 to record payment of the penalty.

Answer 6

Chapter 5, Problem 5.5P

Requirement – 1

To determine

Performance obligation:

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

Variable consideration:

Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.

Deferred revenues:

Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

Answer 7

Chapter 5, Problem 5.5P

Requirement – 1

To determine

Performance obligation:

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

Variable consideration:

Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.

Deferred revenues:

Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To prepare: The journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue.

Answer 8

Requirement – 2

To determine

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

Answer 9

Requirement – 2

To determine

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

Answer 10

Requirement – 3

To determine

To prepare: The journal entry on June 30 to record payment of the penalty.

Answer 11

Requirement – 3

To determine

To prepare: The journal entry on June 30 to record payment of the penalty.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 5 - What are the five key steps a company follows to...Ch. 5 - What indicators suggest that a performance...Ch. 5 - What criteria determine whether a company can...Ch. 5 - We recognize service revenue either at one point...Ch. 5 - What characteristics make a good or service a...Ch. 5 - Prob. 5.6Q Ch. 5 - What must a contract include for the contract to...Ch. 5 - How might the definition of probable affect...Ch. 5 - When a contract includes an option to buy...Ch. 5 - Prob. 5.10Q

Solution Summary: The author explains the rules of debiting and crediting different accounts while they occur in business transactions.

To prepare: The journal entry on June 30 to record receipt of the bonus, and assume total cost saving exceed target.

To prepare: The journal entry on June 30 to record payment of the penalty.

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Chapter 5 Solutions