Requirement – 1
Performance obligation:
Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.
Warranty:
Warranty is the practice of normal business for quality assurance. It is obligation of the seller to make repairs or replace the product if there is any defect or unsatisfactory in future.
Deferred revenues:
Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
To determine: The number of performance obligations included in the Pro tab package.
Requirement – 2
The amount of contract price allocated to each performance obligation.
Requirement – 3
To prepare: The
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- Exercise 20-14 (Algo) Warranty expense [LO20-4] Woodmier Lawn Products introduced a new line of commercial sprinklers in 2020 that carry a one-year warranty against manufacturer’s defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experience of others in the industry. Based on that experience, warranty costs were expected to approximate 3% of sales. Sales of the sprinklers in 2020 were $3,300,000. Accordingly, the following entries relating to the contingency for warranty costs were recorded during the first year of selling the product: Accrued liability and expense Warranty expense (3% × $3,300,000) 99,000 Warranty liability 99,000 Actual expenditures (summary entry) Warranty liability 45,540 Cash (or salaries payable, parts and supplies, etc.) 45,540 In late 2021, the company's claims experience was evaluated and it was determined that claims…arrow_forwardQuestion 15 Consider a policy with a R5000 straight deductible. Determine the amount that the insurer would pay for a loss of R12 000. 1 R7 000 2 R5 000 3 R12 000 4 The insurer will not be liable for any payment.arrow_forward$81,000,000 9% 4 12% Semiannual Using Tormulas and cell references, perform the required analysis, and input your answers into the Amount column. Transfer the numeric results for the green entry cells (C13:C16) into the appropriate fields in CNOWv2 10 for aradina. Compute bond proceeds, amortizing discount by interest method, and interest expense DATA A Face amount bonds 5 Contract rate of interest 6 7 8 9 11 HARMSSA Term of bonds, years Market rate of interest Interest payment 12 13 a. PV of cash proceeds 14 b. Discount amortized for the 1st interest payment period c. Discount amortized for the 2nd interest payment period 16 d. Interest expense for the 1st year 15 17 18 Formulas $73,454,121 Your answer should be a formula. $762,247 Your answer should be a formula. $807,982 Your answer should be a formula. $8,860,229 Your answer should be a formula. Amountarrow_forward
- Hai Mortgage Icepts Excel Assignment: Module 7 1. Origination Fees and Discount Points without Prepayment A lender is offering a 30-year, monthly payment fixed rate mortgage (FRM) loan at 4.5% with an $800 origination fee and 2.5 discount points. A borrower wants a loan for $538,000. What is the yield to the lender, the effective borrowing cost to the borrower, and the APR assuming the loan is held to maturity? Use both the IRR and RATE functions in the green highlighted cells as indicated. Loan Amount Annual Interest Rate Origination Fee Discount Points Maturity (in years) Periods per year $538,000.00 4.50% $800.00 2.50% Month 30 12 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Cash Flow -$523,750.00 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2,725.97 $2.725.97 Using IRR Function Yield to Lender Effective borrowing cost to borrower APR Using…arrow_forwardEXERCISE 7 Filmore Company started selling a new product that carried a 2-year warranty against defects. The warranty provides assurance that the new product will function as intended based on agreed-upon specifications. Based on past experiences with other products, the estimated warranty costs related to peso sales are computed as follows: First year of warranty 3% Second year of waranty 5% Total sales and actual warranty repairs for 2019 and 2020 are given: 2019 2020 P 4,200,000 Actual warranty expenditures 148,800 Sales P 6,960,000 180,000 REQUIRED: a.) What amount should Fillmore report as its estimated warranty liability as of December 31,2020? b.) Based on the above data, assuming that sales and repairs occur evenly throughout the year, how much would be the predicted warranty expense covering 2019 and 2020 sales still under warranty at December 31,2020?arrow_forwardv : X v fx A10 B D E 1 Inputs 2 Annual Interest Rate 5.75% 10 loan, 5-year balloon Income Test Maximum Annual Mortgage Payment Maximum Loan Amount 3 Minimum DSCR 4 Maximum LTV 5 Cash Available to Close $1,500,000.00 * 6 Asking Price/Value 7 NOI 2015 1.20 90% Collateral Test $11,822,261.54 $768,447.00 Maximum Loan Amount LTV Test 8 Both tests 10 11 Debt Service Payment 12 13 Loan Ann Borrows Loan amount to buy the property Debt Service Payment 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 NOI Underwriting NPV-IRR Loan Analysis Enter 100% Escarrow_forward
- 81 PROBLEMS Problem 3-1 (IAA) repair warranty The sale price for each set is P15,000. The average repair cost per set is P800. Research has shown that 20% of all sets sold are repaired in thế first year and 40% in the second year. 2020 2021 300 500 150,000 Number of sets sold 40,000 Total payments'for warranty repairs Required: 1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach. 2. Prepare journał entries in connection with the warranty using the "accrual" approach. 3. Determiņe the estimated warranty liability on December 31, 2021 4. Analyze the estimated warranty liability account to ascertain whether actual warranty costs approximate the estimate. The sales and warrantý repairs are made evenly during the year. 5. Prepare journal entry to correct the estimated warranty liability on December 31, 2021. 82 Problem 3-2 (AICPA Adapted) In 2020, Dare Company bęgan sellingarrow_forwardProblem 1 In 2020, Plumpton Company started selling new computer that carried a 2-year warranty against defects Based on the manufacturer's recommendations, the entity estimated warranty cost as a percentage of sales. First year of warranty Second year of warranty 3% 9% Sales and actual warranty repairs are as follows: Sales Actual warranty repairs 2020 P5.000.000 100.000 2021 P7.000.000 250.000 1. How much is the warranty expense for 2020? 2. How much is the estimated warranty liability for 2021 ?arrow_forward5 Check my work Exercise 13-16 (Algo) Extended warranties [LO13-5, 13-6] Carnes Electronics sells consumer electronics that carry a 90-day manufacturer's warranty. At the time of purchase, customers are offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes received $430,000 for these extended warranties, and on average the warranties were 20% expired by year end. Required: 1-a. Does this situation represent a loss contingency? 1-b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and recognition of any revenue associated with those warranties. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 How should it be accounted for? Revenue is recognized as a(n) and warranty revenue is computed using the Req 1A Req 2 >arrow_forward
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