1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ymorist [56]
3 years ago
11

On January 1, 2017, Sage Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in

exchange for $2,800. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Sage identifies two performance obligations and allocates $1,120 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $670; the shelves have a cost of $330.
Prepare the journal entry on January 1, 2017, for Waterway Prepare the journal entry on February 5, 2017, for Waterway when the wiring base is delivered to the customer. Prepare the journal entry on February 25, 2017, for Waterway when the shelving unit is delivered to the customer and Waterway receives full payment.
Business
1 answer:
slavikrds [6]3 years ago
3 0

Answer:

<u>January 1, 2017</u>

Debit: Accounts Receivable $2800

Credit: Deferred Revenue[Wiring Base] - $1120

Credit: Deferred Revenue[Shelving Unit] - $1680

Narration: Contract Detail and invoicing of the client.

<u>February 5, 2017</u>

Debit Deferred Revenue[Wiring Base] - $1120

Credit Revenue Account - [Wiring Base] - $1120

Narration: Revenue recognition of Wiring Base delivered to customer

<u>February 25, 2017</u>

Debit Deferred Revenue[Shelving Unit]- $1680

Credit Revenue Account - [Shelving Unit] - $1680

Narration: Revenue recognition of Shelf delivered to customer

<u>February 25, 2017</u>

Debit: Bank - $2800

Credit: Accounts Receivable - $2800

Narration: Payment received in settlement of contract fully delivered

Explanation:

The question is an example of a Performance Contract.

A Performance Contract is an agreement with a customer by a vendor to discharge a service or provide goods that are distinct from each other. The accounting for this obligations will therefore be recorded and recognized separately.

It is also important to note that the services or goods must be separately identifiable and the customer must be able to derive from each goods on individually or jointly.

The rule is to

  1. Recognize the contract and invoice amount with the customer as Deferred Income.
  2. Identify the distinct obligations and services to be provided.
  3. Identify the transaction amount for each service or good.
  4. As each obligation is met, the revenue is finally recognized and transferred from Deferred income.
You might be interested in
Everett Company has outstanding 30,000 shares of $50 par value, 6% preferred stock and 70,000 shares of $1 par value common stoc
hoa [83]

Answer:

See explanation section.

Explanation:

Requirement A

If the preferred stock is cumulative, cash dividends paid to each class of stock is as follows:

1st year = Cash dividend's for common stock = $0

Cash dividend's for preferred stock = $0

As there is no declaration of cash dividend for the first year.

As the preferred stock is cumulative, preferred dividends for the first year will be given in the 2nd year.

2nd year = Cash dividend's for common stock = $310,000 - $8,400

= 301,600

Cash dividend's for preferred stock = $4,200 + $4,200 = $8,400

<em>Calculation:</em> 1st year dividend = 70,000 × $1 × 6% = $4,200. It will remain same in the 2nd year for the preferred stock.

3rd year = Cash dividend's for common stock = $90,000 - $4,200

= $85,800

Cash dividend's for preferred stock = $4,200

Preferred dividend's remain same for the 3rd year too.

Requirement B

If the preferred stock is non-cumulative, cash dividends paid to each class of stock is as follows:

1st year = Cash dividend's for common stock = $0

Cash dividend's for preferred stock = $0

As there is no declaration of cash dividend for the first year.

As the preferred stock is non-cumulative, preferred dividends for the first year will not be given in the 2nd year.

2nd year = Cash dividend's for common stock = $310,000 - $4,200

= 305,800

Cash dividend's for preferred stock = $4,200

<em>Calculation:</em> 2nd year dividend = 70,000 × $1 × 6% = $4,200.

3rd year = Cash dividend's for common stock = $90,000 - $4,200

= $85,800

Cash dividend's for preferred stock = $4,200

Preferred dividend's remain same for the 3rd year too.

5 0
3 years ago
The amount of money deposited 25 years ago at 5% interest that would now provide a perpetual payment of $15,000 per year is clos
Mademuasel [1]
The amount of money needed now to begin the perpetual payments is
P = A/I =15,000÷0.05=300,000

The amount that would need to have been deposited 25 years ago is
P=A÷(1+r)^t
P=300,000÷(1+0.05)^(25)
P=88,590.83
6 0
3 years ago
The term inadequacy refers to:______
Anastaziya [24]

Answer: A. The inability of a plant asset to meet its demands.

Explanation:

When something is said to be inadequate, it means that it is not in enough quantity or rather lacks the capacity to perform the tasks that it is needed for.

The same goes when this is being spoken in relation to an asset. A plant asset that is inadequate is unable to meet the demands that it was acquired for.

4 0
2 years ago
Carlisle Transport had $4,716 cash at the beginning of the period. During the period, the firm collected $1,517 in receivables,
Gnesinka [82]

Answer:

the  cash balance at the end of the period is $3,551

Explanation:

The computation of the cash balance at the end of the period is shown below:

= Cash Balance at beginning of the period + received from receivables - paid to suppliers- cash expenses

= $4,716 +  $1,517 - $2,182 - $500

= $3,551

Hence, the  cash balance at the end of the period is $3,551

The above formula should be used for the same

4 0
3 years ago
Net Worth is equal to assets minus liabilities. Which event will have the greatest impact (positive or negative) on one's net wo
ad-work [718]
I would say that for most people, buying an apartment or a house would be the most major thing they could do that would affect their net worth. Initially it would be mostly a liability at first but as it appreciates, especially if it is in a big city where the population keeps growing then it most likely will appreciate and then the owner's assets will increase since their equity will increase.
7 0
2 years ago
Other questions:
  • You go to an all-you-can-eat buffet. if you maximize utility, the marginal utility of the last bite that you eat will be:
    8·1 answer
  • Research has shown that the association between job satisfaction and job performance is ________.
    8·1 answer
  • ________ was a protest movement of debt-ridden farmers facing foreclosures on their homes and farms.
    5·1 answer
  • Sixth fourth bank has an issue of preferred stock with a $6.10 stated dividend that just sold for $123 per share. what is the ba
    12·1 answer
  • Lower inventory levels Group of answer choices make processes less dependent on each other while revealing bottlenecks more quic
    11·1 answer
  • The following items could appear on a bank reconciliation:
    15·1 answer
  • Match the words with the definitions please and thank you
    10·1 answer
  • A joint venture is an agreement between two or more companies to share a business project.
    15·1 answer
  • You need a 30-year, fixed-rate mortgage to buy a new home for $280,000. Your mortgage bank will lend you the money at an APR of
    9·1 answer
  • The CM ____ is responsible for overseeing the actions of the crisis management team and coordinating all crisis management effor
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!