acct 3113 hw for exam 2

Estate Construction is constructing a building for CyberB, an online retailing company. Under the construction agreement, if for any reason Estate can't complete construction, CyberB would own the partially completed building and could hire another construction company to complete the job. When should Estate recognize revenue?

As the building is constructed

Sarjit Systems sold software to a customer for $193,000. As part of the contract, Sarjit promises to provide "free" technical support over the next six months. Sarjit sells the same software without technical support for $168,000 and a stand-alone six-month technical support contract for $72,000, so these products would sell for $240,000 if sold separately. Prepare a journal entry for the sale of software.

Debit: Cash $193,000 Credit: Sales revenue $135,100 Deferred revenue $57,900

On July 1, 2024, Apache Company, a real estate developer, sold a parcel of land to a construction company for $3,920,000. The book value of the land on Apache's books was $1,680,000. Terms of the sale required a down payment of $280,000 and 13 annual payments of $280,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2025. How much revenue will Apache recognize for the sale (ignoring interest), assuming that it recognizes revenue at the point in time at which it transfers the land to the construction company?

revenue 2024: $3,920,000 revenue 2025: $0

On May 1, 2024, Varga Tech Services signed a $126,000 consulting contract with Shaffer Holdings. The contract requires Varga to provide computer technology support services whenever requested over the period from May 1, 2024, to April 30, 2025, with Shaffer paying the entire $126,000 on May 1, 2024. How much revenue should Varga recognize in 2024?

revenue: $84,000

Ski West, Incorporated, operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $80. Adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typically runs from December 1 through April 30. Ski West expects its season pass holders to use their passes equally throughout the season. The company's fiscal year ends on December 31. On November 6, 2024, Jake Lawson purchased a season pass for $430. Required: 1. When should Ski West recognize revenue from the sale of its season passes? 2. Prepare the appropriate journal entries that Ski West would record on November 6 and December 31. 3. What will be included in the Ski West 2024 income statement and balance sheet related to the sale of the season pass to Jake Lawson?

1. Equally throughout the season 2. November 6: Debit: cash $430 Credit: deferred revenue $430 December 31 Debit: Deferred revenue $86 Credit: Service revenue $86 3. Amount $86 included in revenue. Amount $344 remaining balance in deferred revenue.

Vroom Vacuums sells the Tornado vacuum cleaner. Each Tornado has a one-year warranty that covers any product defects. When customers purchase a Tornado, they also have the option to purchase an extended three-year warranty that covers any breakage or maintenance. Customers pay 20% less for the extended warranty if they buy it at the same time they buy a Tornado. How many performance obligations exist in the implied contract for the purchase of a vacuum cleaner?

1. number of performance obligations in the contract=2 2.check= delivery of vacuum cleaner one-year quality assurance warranty no check= option to purchase the three-year extended warranty purchase of vacuum cleaner

Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,435, sells the remote separately for $205, and offers the installation service separately for $410. The entire package sells for $1,950. Required: How much revenue would be allocated to the TV, the remote, and the installation service?

1435+205+410=2050 1950/2050=.9512195... TV: $1,365 (.9512...*1435) Remote: $195 (.9512...* 205) Installation: $390 (.9512...* 410)

On March 1, 2024, Gold Examiner receives $154,000 from a local bank and promises to deliver 100 units of certified 1-ounce gold bars on a future date. The contract states that ownership passes to the bank when Gold Examiner delivers the products to Brink's, a third-party carrier. In addition, Gold Examiner has agreed to provide a replacement shipment at no additional cost if the product is lost in transit. The stand-alone price of a gold bar is $1,482 per unit, and Gold Examiner estimates the stand-alone price of the replacement insurance service to be $78 per unit. Brink's picked up the gold bars from Gold Examiner on March 30, and delivery to the bank occurred on April 1. Required: 1. How many performance obligations are in this contract? 2. to 4. Prepare the journal entry Gold Examiner would record on March 1, March 30, and April 1.

1. number of performance obligations: 2 2. march 1 Debit: cash $154,000 Credit: Deferred revenue (gold) $146,300 Deferred revenue (insurance)- $7700 March 30 Debit: Deferred revenue (gold) $146,300 Credit: sales revenue (gold) $146,300 April 1 Debit: Deferred revenue (insurance) $7700 Credit: Service revenue (insurance) $7700 1482*100=148200 78*100=7800 7800+148200=156000 148200/156000=.95 .95*154000=146300 7800/156000=.05 .05*154000=7700

A New York City daily newspaper called Manhattan Today charges an annual subscription fee of $594. Customers prepay their subscriptions and receive 290 issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $560 for an annual subscription that also would include a coupon to receive a 40% discount on a one-hour ride through Central Park in a horse-drawn carriage. The list price of a carriage ride is $550 per hour. The company estimates that approximately 30% of the coupons will be redeemed. Required: How much revenue should Manhattan Today recognize upon receipt of the $560 subscription price? How many performance obligations exist in this contract? Prepare the journal entry to recognize sale of 11 new subscriptions, clearly identifying the revenue or deferred revenue associated with each performance obligation.

1. revenue= $0 2. Number of performance obligations=2 3. Debit: cash $6160 credit: Deferred subscription revenue $5544 deferred revenue coupons $616 66=550*40%*30% 90%=594/660 10%=66/660