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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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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 Cass pays the final $25,000 on that date.

Required:

  1. 1. On what date does a contract exist between Cass and Dearborn:
  2. 2. What are Cass’s performance obligations in the contract?
  3. 3. What is the transaction price?
  4. 4. Does this transaction price need to be allocated?
  5. 5. Prepare Cass’s journal entries related to the contract with Dearborn.

1.

To determine

Mention the date at which the contract exist between Company C and Incorporation D.

Explanation

Contract:

Contract is an agreement among two parties or more parties which includes enforceable obligations and rights...

2.

To determine

State the Company C’s performance obligations in the contract.

3.

To determine

State the amount of transaction price.

4.

To determine

State whether this transaction price must be allocated.

5.

To determine

Prepare Company C’s journal entries associated to the contract with Incorporation D.

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