Sage Company sells total outdoor grilling solutions, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations.Respond to the requirements related to the following independent revenue arrangements for Sage products and services. Sage offers contract GM205, which is comprised of a free-standing gas grill for small patio use plus installation to a customer's gasline for a total price $744. On a standalone basis, the grill sells for $647 (cost $458), and Sage estimates that the standaloneselling price of the installation service (based on cost-plus estimation) is $143. (The selling of the grill and the installation servicesshould be considered two performance obligations.) Sage signed 10 GM205 contracts on April 20, 2020, and customers paid thecontract price in cash. The grills were delivered and installed on May 15, 2020. Prepare journal entries for Sage for GM205 inApril and May 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry isrequired, select "No entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275.) DateAccount Titles and ExplanationDebitCreditApr. 20, 2020Cash7,440Unearned Sales RevenueUnearned Service RevenueMay 15, 2020Unearned Sales Revenue6,093.36Unearned Service Revenue1,346.64Sales RevenueService Revenue1(To record sales)Cost of Goods Sold4,580Inventory

Solution:- Journal Entries for Sage company:- Date Account details and explanation Debit($)…

Sage Company sells total outdoor grilling solutions, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations. Respond to the requirements related to the following independent revenue arrangements for Sage products and services.

Sage Company sells total outdoor grilling solutions, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations. Respond to the requirements related to the following independent revenue arrangements for Sage products and services.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 3C

See similar textbooks

Similar questions

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?
Sheridan offers contract GM205, which is comprised of a free-standing gas grill for small patio use plus installation to a customer's gas line for a total price $873. On a standalone basis, the grill sells for $757 (cost $454), and Sheridan estimates that the standalone selling price of the installation service (based on cost-plus estimation) is $164. (The selling of the grill and the installation services should be considered two performance obligations.) Sheridan signed 10 GM205 contracts on April 20.
Carla Vista Company sells prefabricated pools that cost $87000 to customers for $136935. The sales price includes an installation fee, which is valued at $19300. The fair value of the pool is $132850. The installation is considered a separate performance obligation and is expected to take 3 months to complete. The transaction price allocated to the pool and the installation is $136935 and $19300 respectively $132850 and $19300 respectively $119565 and 17370 respectively $112073 and $24862 respectively
Bella Pool Company sells prefabricated pools that cost P100,000 to customers for P180,000. The sales price includes an installation fee, which is valued at P25,000. The fair value of the pool is P160,000. The installation is considered a separate performance obligation and is expected to take 3months to complete. The transaction price is allocated to the pool and the installation is:a. P155,676 and P24,324 respectivelyb. P160,000 and P25,000 respectively Show complete solution
On 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.
Metlock Company sells outdoor grilling products, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations. Metlock offers contract MG100 which is comprised of a free-standing gas grill for small patio use plus installation to a customer’s gas line, and a 2-year warranty for parts for a total price $1,000 . On a standalone basis, the grill sells for $750 (cost $420), and Metlock estimates that the cost of the installation service is $100. The company usually gets a 30% profit added services (cost-plus method). Metlock signed 25 MG100 contracts on May 30, 2021, and customers paid the contract price in cash. The grills were delivered and installed on June 15, 2021. Prepare journal entries for Metlock for MG100 in May, June and December of 2021.
Master Grill Company sells outdoor grilling products, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations. Instructions Respond to the requirements related to the following independent revenue arrangements for Master Grill products and services. (a) Master Grill offers contract MG100 which is comprised of a free-standing gas grill for small patio use plus installation to a customer’s gas line for a total price $950. On a standalone basis, the grill sells for $800 (cost $470), and Master Grill estimates that the fair value of the installation service (based on cost-plus estimation) is $200. Master Grill signed 15 MG100 contracts on May 30, 2018, and customers paid the contract price in cash. The grills were delivered and installed on June 15, 2018. Prepare journal entries for Master Grill for MG100 in May and June 2018. (b) Master Grill sells its specialty combination gas/wood-fired grills to local restaurants. Each grill…
Grill Master Company sells total outdoor grilling solutions, providing gas and charcoal grills, accessories, and installation services for custom patio grilling stations. Instructions Respond to the requirements related to the following independent revenue arrangements for Grill Master products and services. a. Grill Master offers contract GM205, which is comprised of a free-standing gas grill for small patio use plus installation to a customer's gas line for a total price $800. On a standalone basis, the grill sells for $700 (cost $425), and Grill Master estimates that the standalone selling price of the installation service (based on cost-plus estimation) is $150. (The selling of the grill and the installation services should be considered two performance obligations.) Grill Master signed 10 GM205 contracts on April 20, 2020, and customers paid the contract price in cash. The grills were delivered and installed on May 15, 2020. Prepare journal entries for Grill Master for GM205 in…
Caramel Spa Company sells prefabricated pools that cost $80,000 to customers for $144,000. The sales price includes an installation fee, which is valued at $20,000. The fair value of the pool is $128,000. The installation is considered a seperate performance obligation and is expected to take 3 months to complete. The transaction price allocated to the pool and the installation is
ABC Co. delivered 150 portable gas stoves to DEF Co. on consignment. These stoves cost P2,700 each and could be sold for P4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that ABC Co. would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others, the following Information: Advertising P6,750; Delivery Expense P3,375 and Commission P10,135. How much is the amount remitted by DEF to ABC for the first month?
Basti Co. delivered 150 portable gas stoves to Sarah Co. on consignment. These stoves cost P2,700 each and could be sold for P4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that Basti Co. would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others, the following information: Advertising P6,750; Delivery Expense P3,375 and Commission P10,135. How many units were sold by Sarah during the first month? a. 15 b. 20 c. 25 d. 30 How much is the amount remitted by Sarah to Basti for the first month? a. 67,500 b. 20,250 c. 22,950…
Basti Co. delivered 150 portable gas stoves to Sarah Co. on consignment. These stoves cost P2,700 each and could be sold for P4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that Basti Co. would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others, the following information: Advertising P6,750; Delivery Expense P3,375 and Commission P10,135. 2.How much is the amount remitted by Sarah to Basti for the first month? 22,950 67,500 20,250 47,250