Azzan Al Badi Trading is a supplier of electrical products to industrial, commercial and residential markets. It has received an order to supply electrical products worth OMR 70,000 in the year 2019. They supplied electrical products worth OMR 40,000 in the year 2020 and electrical products OMR 30,000 were supplied 2021. How much amount will be recorded in the year 2019 if Azzan Al Badi Trading follows realization concept? a. OMR 70,000 b. OMR NIL c. OMR 30,000 d. OMR 40,000
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- Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for 1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of 200 and 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer 1,400. Required: 1. How should the transaction price be allocated among the products? 2. Prepare the journal entries to recognize revenue related to each product in 2019.During 2019, R Corp., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of cocoa beans at 1.00 per pound, delivery to be made in the spring of 2020. Because a record harvest is predicted for 2020, the price per pound for cocoa beans had fallen to 0.80 by December 31, 2019. Of the following journal entries, the one that would properly reflect in 2019 the effect of the commitment of R Corp. to purchase the 100,000 pounds of cocoa is:Cass Company enters into a contract with Dearborn Inc. to sell it $50,000 of goods with delivery on May 10, 2019. Cass manufactured the goods at a cost of $33,000. The contract is signed on April 15, 2019, at which time Dearborn pays Cass $25,000. Cass delivers the goods on May 10, 2019, and Dearborn pays the final $25,000 on that date. Required: 1. On what date does a contract exist between Cass and Dearborn? 2. What are Cass’s performance obligations in the contract? 3. What is the transaction price? 4. Does this transaction price need to be allocated? 5. Prepare Cass’s journal entries related to the contract with Dearborn.
- Entity A is a manufacturer of consumer goods. On 1 January 2020, Entity A entered into a one-year contract to sell goods to a large global chain of retail stores. The customer committed to buying at least $90,000,000 of products in January. The contract required Entity A to make a non-refundable payment of $200,000 to the customer at the inception of the contract. The $200,000 payment is to compensate the customer for the changes required to its shelving to accommodate Entity A's products. Entity A duly paid this $200,000 to the customer on 3 January 2020. Entity A transferred goods with an invoice price of $98,000,000 to the customer on 31 January 2020. The customer agreed to settle the outstanding amount by two payments, i.e. 40% and 60% of the outstanding amount on 18 February 2020 and 31 March 2020 respectively. REQUIRED: Provide journal entries for Entity A from 1 January 2020 to 31 March 2020 under relevant accounting standards. ACCOUNT FOR INPUT: | Bank | Payable |…Besik Inc. operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. During 2020, the entity issued 25,000 award credits and expects that 85% of these shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,500,000. In 2020, the entity sold goods to customers for a total consideration of P 8,500,000 based on stand-alone selling price. On Dec. 31, 2020, 10,000 award credits have been redeemed. In 2021, the management revised expectations and expects 80% of the award credits to be redeemed. In 2021, 5,000 award credits redeemed. What is the revenue earned from award credits for 2021? *a. P 956,250b. P 600,000c. P 356,250d. P 318,750Zoro Company enters into a contract to sell Product A and Product B on July 1, 2020 for an upfront cash payment of P250,000. Product A will be delivered at the end of the year, and Product B will be delivered the following year. Zoro Company sells Product A for P80,000 and Product B for P240,000. 1. How many performance obligations are there in the contract? 2.what is the transaction price? 3.how much is revenue to be recognized in 2020? 4. how much is revenue to be recognized in 2021?
- Sky Jewelers Muscat received an order to supply gold ornaments worth OMR 50,000. They supplied ornaments worth OMR 30,000 up to the year ending 31st December 2020 and rest of the ornaments worth OMR 20,000 were supplied in January 2021. - Which accounting concept/convention must be followed while recording this transaction?Cass Company enters into a contract with Dearborn Inc. to sell it $50,000 of goods with delivery on May 10, 2019. Cass manufactured the goods at a cost of $33,000. The contract is signed on April 15, 2019, at which time Dearborn pays Cass $25,000. Cass delivers the goods on May 10, 2019, and Dearborn pays the final $25,000 on that date. Required: 1. What is the transaction price? 2. Prepare Cass’s journal entries related to the contract with Dearborn.Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The fair value of the award credits granted is reliably measured at P2,000,000. In 2020, the entity sold goods to customers for a total consideration of P9,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85% 2023 15,000 90% Required: Prepare journal entries from 2020 to 2023.
- Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85%…On August 1, 2019, Aiken Corp. enters into a contract with Benton Corp. to sell it $25,000 of goods. Aiken will deliver the goods on August 30, 2019, and Benton will pay the full amount upon acceptance. The goods were manufactured by Aiken at a cost of $18,000. Both Aiken and Benton consider the acceptance of the goods on August 30 a formality given that Benton has purchased the same goods from Aiken numerous times without incident. On August 30, 2019, Aiken delivers the goods and Benton transfers cash to Aiken. required: 1.Prepare the journal entries in August 2019 necessary to account for this transaction. Assume Aiken uses a perpetual inventory systemA company entered into a contract with one of the customer to supply a sophisticated machinery for 200,000 on 01/07/2020. The Contract is coming with selling a machinery, 3 years maintenance and a one-year replacement guarantee. The stand-alone selling price of machinery is 120,000, the replacement guarantee costs 10,000 and free services expected to costs the company 20,000. As per the terms of sales, the customer may pay to the firm either on 01/01/2020- 200,000, 01/03/2020- 210,000 or 01/05/2020- 225,000. As per past experience there is high probability that the customer pays on 01/05/2020. You are required to write necessary treatments per IFRS 15. Also show the net effect of this transaction on the financial statements of the firm.