FUND.OF FINANCIAL ACCOUNTING ACCESS
LATEST Edition
ISBN: 9781260118841
Author: PHILLIPS
Publisher: McGraw-Hill Publishing Co.
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 4CP
1.
To determine
Calculate the dollar amount of revenue earned from the oil change service and for the sale of parts.
2.
To determine
Prepare the necessary journal entries for Company G.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Allocating Transaction Price to Performance Obligations and Recording Sales
Software Supplier Inc. sells to a customer a perpetual software license and post-contract customer support for a 12-month period, commencing at the time that the software is activated. Software Supplier Inc. charges $360 upfront when the software is purchased and
$24 a month for 12 months, due at the end of the month. Software Supplier Inc. sells the software separately for $480 while the standalone selling price of the post-contract customer support is $240.
Note: Carry all decimals in calculations; round the final answer to the nearest dollar.
Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).
a. How should the transaction price be allocated among the performance obligation(s)?
Performance
Obligations
Software
Customer support
Transaction Price as Stated Standalone Selling Price…
Great American Oilchange (GAO) sells a combined oil change service and parts package for $40. A
customer who supplies the parts (oil and filter) is charged $30 for only the service, whereas a customer
who buys only the oil and filter (for do-it-yourself use) is charged $30 for the parts. The parts cost GAO
$24.
CP6-4 (Algo) Part 2
1. Prepare the journal entry GAO would record if GAO provides a combined oil change service and parts package to a
customer on October 7. Assume GAO distinguishes Service Revenue from Sales Revenue arising from the sale of parts,
uses a perpetual inventory system for recording the cost of goods sold, and it collects cash the day the oil change is
performed. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account
field.)
View transaction list
Journal entry worksheet
Great American Oilchange (GAO) sells a combined oil change service and parts package for $40. A
customer who supplies the parts (oil and filter) is charged $30 for only the service, whereas a customer
who buys only the oil and filter (for do-it-yourself use) is charged $30 for the parts. The parts cost GAO
$24.
CP6-4 (Algo) Part 1
Required:
1. Determine the dollar amount of revenue from the oil change service versus the sale of parts for each combined oil
change package. TIP: To calculate the percentage of the combined package that relates to the service, divide the stand-
alone selling price of the service by the combined stand-alone selling prices of both the service and parts.
Parts
Service
Allocated
Transaction Price
234
$
8
9
J
1/
dele
Chapter 6 Solutions
FUND.OF FINANCIAL ACCOUNTING ACCESS
Ch. 6 - Prob. 1QCh. 6 - If a Chicago-based company ships goods on...Ch. 6 - Define goods available for sale. How does it...Ch. 6 - Define beginning inventory and ending inventory.Ch. 6 - Describe how transportation costs to obtain...Ch. 6 - What is the main distinction between perpetual and...Ch. 6 - Why is a physical count of inventory necessary in...Ch. 6 - What is the difference between FOB shipping point...Ch. 6 - Describe in words the journal entries that are...Ch. 6 - What is the distinction between Sales Returns and...
Ch. 6 - Prob. 11QCh. 6 - In response to the weak economy, your companys...Ch. 6 - Prob. 13QCh. 6 - Why are contra-revenue accounts used rather than...Ch. 6 - What is gross profit? How is the gross profit...Ch. 6 - Prob. 1MCCh. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - Prob. 7MCCh. 6 - Prob. 8MCCh. 6 - A company bundles a product and service that...Ch. 6 - Prob. 10MCCh. 6 - Distinguishing among Operating Cycles Identify the...Ch. 6 - Calculating Shrinkage in a Perpetual Inventory...Ch. 6 - Accounting for Inventory Transportation Costs XO...Ch. 6 - Prob. 4MECh. 6 - Evaluating Inventory Cost Components Assume...Ch. 6 - Recording Journal Entries for Purchases and Safes...Ch. 6 - Prob. 7MECh. 6 - Prob. 8MECh. 6 - Prob. 9MECh. 6 - Prob. 10MECh. 6 - Calculating Shrinkage and Gross Profit in a...Ch. 6 - Prob. 12MECh. 6 - Preparing a Multistep Income Statement Sellall...Ch. 6 - Computing and Interpreting the Gross Profit...Ch. 6 - Computing and Interpreting the Gross Profit...Ch. 6 - Interpreting Changes in Gross Profit Percentage...Ch. 6 - Determining the Cause of Increasing Gross Profit...Ch. 6 - Understanding Relationships among Gross Profit and...Ch. 6 - Prob. 19MECh. 6 - Recording Journal Entries for Purchase Discounts...Ch. 6 - Recording Journal Entries for Sales and Sales...Ch. 6 - Recording Journal Entries for Sales and Sales...Ch. 6 - Prob. 23MECh. 6 - Prob. 24MECh. 6 - Relating Financial Statement Reporting to Type of...Ch. 6 - Inferring Merchandise Purchases The Gap, Inc., is...Ch. 6 - Identifying Shrinkage and Other Missing inventory...Ch. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Inferring Missing Amounts Based on Income...Ch. 6 - Reporting Purchases and Purchase Discounts Using a...Ch. 6 - Reporting Purchases, Purchase Discounts, and...Ch. 6 - Items Included in Inventory PCM, Inc., is a direct...Ch. 6 - Prob. 10ECh. 6 - Reporting Net Sales after Sales Discounts The...Ch. 6 - Reporting Net Sales after Sales Discounts and...Ch. 6 - Determining the Effects of Credit Sales, Sales...Ch. 6 - Analyzing and Recording Sales and Gross Profit...Ch. 6 - Prob. 15ECh. 6 - Inferring Missing Amounts Based on Income...Ch. 6 - Analyzing Gross Profit Percentage on the Basis of...Ch. 6 - Analyzing Gross Profit Percentage on the Basis of...Ch. 6 - (Supplement 6A) Recording Journal Entries for...Ch. 6 - (Supplement 6A) Recording Journal Entries for...Ch. 6 - (Supplement 6A) Recording Journal Entries for...Ch. 6 - (Supplement 6A) Recording Journal Entries for...Ch. 6 - Prob. 23ECh. 6 - Prob. 24ECh. 6 - (Supplement 6A) Recording Journal Entries for Net...Ch. 6 - Prob. 26ECh. 6 - Prob. 27ECh. 6 - Prob. 28ECh. 6 - (Supplement 6A) Recording Purchases and Sales...Ch. 6 - Purchase Transactions between Wholesale and Retail...Ch. 6 - Prob. 2CPCh. 6 - Recording Cash Sales, Credit Sales, Sales Returns,...Ch. 6 - Prob. 4CPCh. 6 - Preparing a Multistep Income Statement and...Ch. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Reporting Purchase Transactions between Wholesale...Ch. 6 - Reporting Sales Transactions between Wholesale and...Ch. 6 - Recording Sales with Discounts and Returns and...Ch. 6 - Prob. 4PACh. 6 - Preparing a Multistep Income Statement and...Ch. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Reporting Purchase Transactions between Wholesale...Ch. 6 - Prob. 2PBCh. 6 - Prob. 3PBCh. 6 - Prob. 4PBCh. 6 - Preparing a Multistep Income Statement and...Ch. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Reporting Cash, Inventory Orders, Purchases,...Ch. 6 - Preparing Journal Entries for Inventory Purchases,...Ch. 6 - Finding Financial Information Refer to the...Ch. 6 - Prob. 2SDCCh. 6 - Ethical Decision Making: A Mini-Case Assume you...Ch. 6 - Prob. 5SDCCh. 6 - Preparing Multistep Income Statements and...Ch. 6 - Prob. 1CC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Allocating Transaction Price to Performance Obligations and Recording Sales Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $196) for cash at the usual selling price of $280 and earns 280 points redeemable for $56 off future purchases of goods or services. The retailer expects redemption of 252 points or 90% of points earned. Required a. How should the transaction price be allocated among the performance obligation(s)? *Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Performance Obligations Product purchase s Loyalty rewards Total Transaction Price as stated Account Name To record sale of product. 280 ✔ S To record cost of sale of product. 280 S b. Prepare Maximum's journal entry to record the $280 sale to the customer and the cost of that sale where the customer earned 280 loyalty points. *Note: If a…arrow_forwardAllocating Transaction Price to Performance Obligations and Recording Sales Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned. a. How should the transaction price be allocated among the performance obligation(s)?Note: Round each allocated transaction price in the table below to the nearest dollar. Performance Obligations TransactionPriceas Stated StandaloneSellingPrice AllocatedTransaction Price(rounded) Product purchase Answer Answer Answer Loyalty rewards Answer Answer Answer Answer Answer Answer b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400…arrow_forwardThe following represents the financial information for Plaza Plastics for May and June: Sales revenue Costs Scrap Process inspection Quality training Product testing equipment Field testing Warranty repairs Rework Preventive maintenance Legal expense for warranty claims. Materials inspection Required A May $ 843,000 Required B Scrap $ 2,160 3,040 23,940 5,340 8,580 3,540 19,940 16,380 7,980 11,460 Required: a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs. b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for May and June. Activity Complete this question by entering your answers in the tabs below. June $ 636,000 $ 1,870 1,920 11,880 4,500 6,480 3,240 16,830 8,730 4,500 11,340 Classify these items into Prevention, Appraisal, Internal failure, or External failure costs. Categoryarrow_forward
- Value Dealership Inc. markets and sells vehicles to retail customers. Along with a new vehicle purchase, a customer will receive a free annual maintenance contract for one year from the date of purchase. The standalone selling price of a vehicle is $18,000 and the standalone selling price for the annual maintenance contract is $367. During October, Value Dealership Inc. sold 18 vehicles for $18,150 per vehicle, each with a free annual maintenance contract. •Note: Carry all decimals in calculations; round the final answer to the nearest dollar. •Note: If a line of the journal entry isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answer blank (zero). a. Determine how the transaction price should be allocated among the performance obligation(s) and record the journal entry in October for Value Dealership's sale of 18 vehicles with the associated maintenance contracts to customers. Ignore the cost entry. Performance Obligations Transaction…arrow_forwardInformation for number 6 and 7 An offer from the supplier to pay the materials ahead of time is Terms= 3/15, net 30. The materials cost to be purchased amounts $ 50,000. 6. Compute for the cost of the discount 7. If you are the business owner, will you take the discount or pay after the discount?arrow_forwardPurchased 500 coasters on account from the regular supplier on 12/1 at a unit cost of $0.52, with terms of n/60. Record the transaction.arrow_forward
- Purchase-Related Transactions A retailer is considering the purchase of 1,000 units of a specific item from either of two suppliers. Their offers are as follows: Supplier One: $34.80 a unit, 1/10, n/30, no charge for freight.Supplier Two: $35.00 a unit, 2/10, n/30, plus freight of $200. Price of Supplier One: Price of Supplier Two: Which of the two offers, Supplier One or Supplier Two, yields the lower price?arrow_forwardUnearned Sales Revenue Brand Landscaping offers a promotion where a customers lawn will be mowed 20 times if the customer pays $700 in advance. Required: Prepare the journal entry to record (1) the customers' prepayment of S700 and (2) Brands mowing of the lawn one time.arrow_forwardLuke sells machines, and also offers installation and technical support services. The individual selling prices of each product are shown below. Sale price of goods $75 Installation $25 A year’s service $50 Company X bought a machine on 1 May 2018 and was charged a reduced price of $100. Luke only offers discounts when customers purchase a package of products together. According to IFRS 15 Revenue from Contracts with Customers, how much should be recorded in revenue for the year ended 31 December 2019? Answer should be rounded to the nearest $.arrow_forward
- TB MC Qu. 6-93 Inventory records for Marvin Company... 38 Inventory records for Marvin Company revealed the following: of Onite Cost Мar. 1 Beginning inventory 960 $7.28 34 Mar.10 Purchase 570 7.71 Mar.16 Purchase 790 8.16 Mar.23 Purchase 550 8.56 Marvin sold 1,960 units of inventory during the month. Cost of goods sold assuming FIFO would Round your answer to the nearest dollar amount.) Multiple Choice $13,942.arrow_forwardHeadland sells its specialty combination gas/wood-fired grills to local restaurants. Each grill is sold for $1,010 (cost $536) on credit with terms 2/30, net/90. Prepare the journal entries for the sale of 20 grills on September 1, 2020, and upon payment, assuming the customer paid on (1) September 25, 2020, and (2) October 15, 2020. Assume the company records sales net. (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 0 for the amounts.) Account Titles and Explanation Accounts Receivable Sales Revenue To record sales) Cost of Goods Sold Inventory To record cost of goods sold) Cash Accounts Receivable Accounts Receivable Sales Revenue To record sales) Cost of Goods Sold Inventory. To record cost of goods sold) Cash Accounts Receivable Sales Discounts Forfeited Debit Creditarrow_forwardEA1. On March 1, Bates Board Shop sells 300 surfboards to a local lifeguard station at a sales price of $400 per board. The cost to Bates is $140 per board. The terms of the sale are 3/15, n/30, with an invoice date of March 1. Create the journal entries for Bates to recognize the following transactions.A. the initial saleB. the subsequent customer payment on March 10arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Revenue recognition explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=816Q6pOaGv4;License: Standard Youtube License