On January 15, 2023, Caramel Company enters into a contract to build custom equipment for Candy Company. The contract specified a delivery date of of March 1. The equipment was not delivered until March 31. the contract required full payment of $75,000 30 days after delivery. the revenue for this contract should be
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On January 15, 2023, Caramel Company enters into a contract to build custom equipment for Candy Company. The contract specified a delivery date of of March 1. The equipment was not delivered until March 31. the contract required full payment of $75,000 30 days after delivery. the revenue for this contract should be
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- On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?On February 1, 2023, Armen Inc. entered into a contract to deliver one of its specialty machines to Idris Inc. The contract requires Idris Inc to pay the contract price of $15,000 in advance on February 20, 2023. Idris Inc. pays Armen Inc on February 20, 2023, and Armen Inc delivers the machine (costing $12,600) on February 28, 2023 and Idris Inc starts using the machine on March 3, 2023. When should Armen Inc recognize revenue?On July 1, 2021, Blossom Inc. entered into a contract to deliver one of its specialty machines to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $5,600 in advance on July 15, 2021. Kickapoo pays Blossom on July 15, 2021, and Blossom delivers the machine (with cost of $2,000) on July 31, 2021. (a) Prepare the journal entry on July 1, 2021, for Blossom. (b) Prepare the journal entry on July 15, 2021, for Blossom. (c) Prepare the journal entry on July 31, 2021, for Blossom. (To record contract price paid) and (To record cost of machine)
- On July 1, 2021, Concord Inc. entered into a contract to deliver one of its specialty machines to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $5,400 in advance on July 15, 2021. Kickapoo pays Concord on July 15, 2021, and Concord delivers the machine (with cost of $2,100) on July 31, 2021. Prepare the journal entry on July 1, 2021, for Concord. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Prepare the journal entry on July 15, 2021, for Concord. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account…On May 10, 2025, Cullumber Co. enters into a contract to deliver a product to Oriole Inc. on June 15, 2025. Oriole agrees to pay the full contract price of $1,980 on July 15, 2025. The cost of the goods is $1,280. Cullumber delivers the product to Oriole on June 15, 2025, and receives payment on July 15, 2025. Prepare the journal entries for Cullumber related to this contract. Either party may terminate the contract without compensation until one of the parties performs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit SIOn January 1, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. 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. Gordon identifies two performance obligations and allocates $1,200 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $700; the shelves have a cost of $320. Instructions a. Prepare the journal entry on January 1, 2020, for Gordon. b. Prepare the journal entry on February 5, 2020, for Gordon when the wiring base is delivered to the customer. c. Prepare the journal entry on February 25, 2020, for Gordon when the shelving unit is delivered to the customer and Gordon receives full payment.
- Caratini Company sells custom-made windows to Bryant Inc. for a new office building. The sale price for the windows is $275,000. Caratini requires customers to provide a down payment of 15% before it designs and manufactures the windows to customer specifications. Bryant makes the down payment on December 10, 2025, and the windows are completed and delivered on April 3, 2026.Instructions Prepare the entry for Caratini when it receives the down payment.Prepare the entry (or entries) for Caratini on April 3, 2026. The cost of the windows is $200,000.Careful Company sells goods that cost P600,000 to a customer for P800,000 on December 20, 2021. The sales price includes an installation fee, which is valued at P80,000. The fair value of the goods is P740,000. The installation is considered a separate performance obligation and is expected to take 3 months to complete. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021 and 2022?. Allee Corp. is evaluating a revenue arrangement to determine proper revenue recognition. The contract is for construction of 10 speedboats for a contract price of $400,000. The customer needs the boats in its showrooms by February 1, 2021, for the boat purchase season; the customer provides a bonus payment of $21,000 if all boats are delivered by the February 1 deadline. The bonus is reduced by $7,000 each week that the boats are delivered after the deadline until no bonus is paid if the boats are delivered after February 15, 2021. Allee frequently includes such bonus terms in it contracts and thus has good historical data for estimating the probabilities of completion at different dates. It estimates an equal probability (25%) for each full delivery outcome. What approach should Allee use to determine the transaction price for this contract? Explain.
- Infotech Bhd enters a contract on 1 January 2019 to produce software for a customer for RM7,000,000. Infotech Bhd receives RM2,000,000 from the customer upon contract signing and the balance at the completion of the contract. According to the contract, the customer controls the system during the creation of the program. Infotech Bhd estimates that it will take two years to complete the project and uses the number of labor hours to estimate the rate of completion. Infotech spends 40,000 hours in the first year of the contract and another 10,000 hours the second year Prepare the entries recorded by Infotech over the life of this contract. Assume that all payments are complete by the end of 2020On December 1, 2020, Shyam Construction Co. entered into a contract with a customer for the construction of a building. The contract prices are $44,00,000, which is to be billed to the customers periodically based on Shyam's progress on the construction. The estimated total contract cost is $28,00,000. The actual costs incurred in 2020 amounts to $12,00,000. Requirement: The revenue to be recognized in 2020Brainy Company started the construction of a building for a customer at a fixed contract price of P2,000,000 on January 1, 2019. On the same date, the customer paid a mobilization fee equal to 5% of contract price that will be deductible from the first billing. The outcome of construction contract can be estimated reliably except in 2019 which is the start of the project. The company billed the customer equivalent to 30%, 20% and 40% of the contract price during 2019, 2020 and 2021, respectively. The remaining billing was made at the year of completion of the project. The company made collection from the customer at the end of 2019, 2020 and 2021, in the amount of P240,000, P900,000 and P360,000, respectively. Direct costs related to the said project (see image below).1. What is the Percentage of completion in 2020? 2. How much is the Construction Revenue to be recognized in 2020? 3. How much is the Gross Income (Loss) to be recognized in 2021? 4. How much is the balance of Account…