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. Warranty: Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future. 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 determine: The number of performance obligations included in the Pro tab package.

Question

Want to see the full answer?

Answer 1

Question

Chapter 6, Problem 6.3P

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.

Warranty:

Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.

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 determine: The number of performance obligations included in the Pro tab package.

Requirement – 2

To determine

The amount of contract price allocated to each performance obligation.

Requirement – 3

To determine

To prepare: The journal entry for sales of pro tab packages.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Carla Vista Manufacturing Company uses a job order cost system and keeps perpetual inventory records. June 1 Purchased raw materials for $23,600 on account. 8 Raw materials requisitioned by production: $9,440 Direct materials Indirect materials 1,180 Paid factory utilities, $2,478 and repairs for factory equipment, $9,440. 15 25 Incurred $122,000 of factory labor. 25 Time tickets indicated the following: Direct Labor (7,000 hrs x $14 per hr) $98,000 Indirect Labor (3,000 hrs x $8 per hr) 24,000 $122,000 45 25 Applied manufacturing overhead to production based on a predetermined overhead rate of $7 per direct labor hour worked. 28 30 Goods costing $18,020 were completed in the factory and were transferred to finished goods inventory. Goods costing $15,020 were sold for $20,020 on account. Prepare journal entries to record the above transactions during the month of June. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit…

PART 2. (22 marks) Mangal Furnishings produce serving trays for the tourist industry in a five-stage process - Cutting & Shaping, Assembly, Sanding, Finishing and Packaging. Upon entering the finishing process, before the trays are stained and polished, a specialized piece of equipment is used to engrave a logo on each tray. After Packaging, the trays are sent to the business warehouse for delivery to customers. The following data relates to the Finishing Process for the month of March during which 3,800 trays valued at $597.90 each were transferred in from the Sanding Process. Other production costs incurred during the month are summarized as follows: Direct Materials Added Direct Manufacturing Wages Hireage cost of specialized logo equipment Manufacturing Overhead $343,380 $830,150 $21,300 $412,100 Process inspection occurs during the process and normally 2% of the trays entering the Finishing process are rejected and sold as scrap to local retailers at $750 each. During the month…

Cline Manufacturing Company uses a job order system and maintains perpetual inventory records. Indicate the the appropriate account(s) to be debited and credited for the transactions listed below. (On multiple entries enter answers in alphabetical order.) Transactions 1. Raw materials were purchased on account. 2. Issued a check to Dixon Machine Shop for repair work on factory equipment. 3. Direct materials were requisitioned for Job 280. 4. Factory labor was paid as incurred. 5. Recognized direct labor and indirect labor used. 6. The production department requisitioned 7. indirect materials for use in the factory. Manufacturing overhead was applied to production based on a predetermined overhead rate of $8 per labor hour. 8. Goods that were completed were transferred to finished goods inventory. 9. Goods costing $80,000 were sold for $105,000 on account. 10. Paid for raw materials purchased previously on account. Account(s) Debited

Answer 2

Question

Chapter 6, Problem 6.3P

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.

Warranty:

Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.

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 determine: The number of performance obligations included in the Pro tab package.

Requirement – 2

To determine

The amount of contract price allocated to each performance obligation.

Requirement – 3

To determine

To prepare: The journal entry for sales of pro tab packages.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 6, Problem 6.3P

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.

Warranty:

Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.

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 determine: The number of performance obligations included in the Pro tab package.

Requirement – 2

To determine

The amount of contract price allocated to each performance obligation.

Requirement – 3

To determine

To prepare: The journal entry for sales of pro tab packages.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 6, Problem 6.3P

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.

Warranty:

Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.

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 determine: The number of performance obligations included in the Pro tab package.

Requirement – 2

To determine

The amount of contract price allocated to each performance obligation.

Requirement – 3

To determine

To prepare: The journal entry for sales of pro tab packages.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 6, Problem 6.3P

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.

Warranty:

Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.

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 determine: The number of performance obligations included in the Pro tab package.

Requirement – 2

To determine

The amount of contract price allocated to each performance obligation.

Requirement – 3

To determine

To prepare: The journal entry for sales of pro tab packages.

Answer 6

Chapter 6, Problem 6.3P

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.

Warranty:

Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.

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 determine: The number of performance obligations included in the Pro tab package.

Answer 7

Chapter 6, Problem 6.3P

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.

Warranty:

Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.

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 determine: The number of performance obligations included in the Pro tab package.

Answer 8

Requirement – 2

To determine

The amount of contract price allocated to each performance obligation.

Answer 9

Requirement – 2

To determine

The amount of contract price allocated to each performance obligation.

Answer 10

Requirement – 3

To determine

To prepare: The journal entry for sales of pro tab packages.

Answer 11

Requirement – 3

To determine

To prepare: The journal entry for sales of pro tab packages.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 6 - What are the five key steps a company follows to...Ch. 6 - What indicators suggest that a performance...Ch. 6 - What criteria determine whether a company can...Ch. 6 - We recognize service revenue either at one point...Ch. 6 - What characteristics make a good or service a...Ch. 6 - Prob. 6.6Q Ch. 6 - What must a contract include for the contract to...Ch. 6 - How might the definition of probable affect...Ch. 6 - When a contract includes an option to buy...Ch. 6 - Prob. 6.10Q

Solution Summary: The author explains that the number of performance obligations in the Pro tab package is three.

The amount of contract price allocated to each performance obligation.

To prepare: The journal entry for sales of pro tab packages.

Want to see the full answer?

Chapter 6 Solutions