Chapter 8, Problem 50P

Aria Perfume, Inc., sold 3,210 boxes of white musk soap during January of 2018 at the price of $90 per box. Thecompany offers a full refund to unsatisfied customers for any product returned within 30 days from the date ofpurchase. Based on historical experience, Aria expects that 3% of sales will be returned. How many performanceobligations are there in each sale of a box of soap? How much revenue should Aria recognize in January?

Sandusky Co sells computers and provides hardware maintenance services. On May 1st, Sandusky sold a package deal containing a computer and a one-year unlimited maintenance/repair service for the computer at a bundle price of $1,000. If sold separately, the computer costs $840 and the one-year unlimited maintenance/repair service costs $360. How much revenue does Sandusky recognize for the month ended May 3ist, assuming that revenue is accrued monthly?

Douglas Corporation reports it sold merchandise on account for a total of $800,000 for the current year. The cost to Douglas for the merchandise was $300,000. To encourage early payment, Douglas offers its customers credit terms of 1/10, n/30. At year-end, there is $150,000 of sales on account still eligible for the 1 percent discount. Douglas believes that all customers will pay within the discount period to receive the discount. Prepare the adjusting journal entry needed for Douglas Corporation to comply with the new revenue recognition standard. Assume Douglas’s fiscal year-end is December 31.

During the current year, Gardner Home Center sold 800 power washers for $350 each. The power washers carry a 2-year warranty for repairs. Estimates indicate that repair costs will average 2% of sales. How much warranty expense should be accrued at the end of the current year as a result of the sales of this product? a.$8,400 b.$5,600 c.$2,800 d.No liability should be recorded until units are brought in for repairs.