Cass Company enters into a contract with Dearborn Inc. to sell it $50,000 of goods with delivery on May 10, 2017. Cass manufactured the goods at a cost of $33,000. The contract is signed on April 15, 2017, at which time Dearborn pays Cass $25,000. Cass delivers thegoods on May 10, 2017, and Cass pays the final $25,000 on that date.Required:1. On what date does a contract exist between Cass and Dearborn?2. What are Cass's performance obligations in the contract?3. What is the transaction price?4. Does this transaction price need to be allocated?5. Prepare Cass's journal entries related to the contract with Dearborn.

The process of recording business transactions in the books of accounts for the first time is known…

Answered: s Company enters into a contract with…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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a. Innotech Apps Berhad entered two contracts on the same date with Advance Cool Corporation. Innotech Apps has provided the following analysis of price and cost for the contracts: Contract price Cost of related goods Gross profit (loss) Helixx Primaxx RM 250,000 RM 275,000 175,000 215,000 65,000 75,000 RM RM Advance Cool, the customer, may cancel both contracts if either of them is not fulfilled by Innotech Apps in a timely manner. Stand-alone prices are typically RM275,000 for the goods in Helixx and RM 300,000 for the goods in Primaxx. i. Should the two contracts be combined for purposes of applying the five-step revenue recognition model? Why? Calculate the transaction price? ii. Calculate amount of revenue should Innotech Apps Berhad associate with each of the contracts? iii. Explain when should revenue be recognized on each of the contracts?
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Carla Vista Inc., a registered broker, enters into a finder's fee agreement with Wildhorse Homes Ltd. on June 15, 2023. Carla Vista will find leads in the form of buyers potentially interested in purchasing Wildhorse's real estate holdings. Along with finding potential buyers, Carla Vista helps negotiate the selling price and provides advice on contract details. If and when Wildhorse closes a sale, Carla Vista will be paid within 30 days of the closing date, based on the following formula: 5% of any transaction value up to and including $1 million, plus 4% of any transaction value greater than $1 million and less than and including $2 million, plus 3% of any transaction value greater than $2 million and less than and including $3 million, plus 2% of any transaction value greater than $3 million and less than and including $4 million, plus 1% of any transaction value in excess of $4 million. If Carla Vista uses another broker and this information is not shared with Wildhorse, the fee is…
None
Company X orders raw materials for EUR 1,000 and manages to obtain a discount of 15% from one of its suppliers. Once raw materials are received, defaults are noted by the warehouse manager. Company X intends a lawsuit against its supplier. Company C's lawyer estimates that Company C might be entitled to receive EUR 200. Decision from the court: the supplier needs to grant a rebate of EUR 150. Prepare the accounting journal entries for the purchase, for the suit and the rebate at the level of Company C.
Bruno Mars Company enters into a contract with John Legend to deliver Products X and Y in exchange for a non- interest bearing note with a face value of P192,685.38, on January 1, 2020. Product X will be delivered in December 31, 2021 and Product Y in December 31, 2024. Upon delivery of product X, Bruno Mars will receive P42,135 and the remaining P150,550.38 will be received upon delivery of Product Y. The contract is non-cancellable. Bruno normally sells Product X at P43,750 cash price equivalent while Product Y can be sold at P131,250. Nonetheless, due to the nature of the bundled purchase, John Legend is given a favorable pricing. A financing rate of 6% is appropriate based on Bruno’s credit-standing at contract inception. Bruno uses December 31 as its year end. How much total revenue can Bruno report in its December 31, 2021 income statement? How much total revenue can Bruno report in its December 31, 2024 income statement?
Bridgeport Inc. enters into an agreement on March 1, 2020, to sell Werner Metal Company aluminum ingots. As part of the agreement, Bridgeport also agrees to repurchase the ingots on May 1, 2020, at the original sales price of $190,000 plus 3%. (a) Prepare Bridgeport's journal entry necessary on March 1, 2020. (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 ancienter O for the amounts.) Account Titles and Explanation eTextbook and Media List of Accounts Debit Credit
Kk.303.
(a) On 1 May 20121, Amin Trading Sdn. Bhd. (Amin) has an agreement to deliver 250 units ofcordless vacuum cleaner to Dibea Sdn. Bhd. (Dibea) by 31 August 2021. Based on theagreement, Amin can terminate the agreement any time before 31 August 2021 without havingto pay any compensation to Dibea on non-delivery of the product.Explain whether there is any contract that exists between Amin and Dibea. (b) Jabra Sdn. Bhd. (Jabra) has entered into two contracts with Poco Sdn. Bhd. (Poco). Under thefirst contract, Jabra is to deliver bricks for RM90,000 and the second contract is to build a TNBsub-station for RM40,000 at Poco’s project site.Explain whether the above two contracts should be accounted for as a single contract in thebooks of Jabra.
ABC Corp. is engaged in the manufacture and sale of facemasks. To increase sales, the marketing arm of the Company entered into consignment agreements with third parties. Inday. a consignee received the facemasks on March 1, 2021. If unsold, VAT shall accrue on: O April 29, 2021 O May 1, 2021 O April 30, 2021 O No VAT shall accrue
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A company enters a contract to supply three distinct products to a customer. The promise to supply each of these products is regarded as a separate performance obligation. The stand-alone prices of the three products (if sold separately) are: Product X OMR 12,500, Product Y OMR 24,000, and Product Z OMR 27,500. The agreed contract price is OMR 57,600. How should this price be allocated to performance obligations? O a. Product X OMR 12,500, Product Y OMR 24,000, and Product Z OMR 27,500. O b. Product X OMR 10,367, Product Y OMR 21,867, and Product Z OMR 25,366. O . Product X OMR 19,200, Product Y OMR 19,200, and Product Z OMR 19,200. O d. Product X OMR 11,250, Product Y OMR 21,600, and Product Z OMR 24,750.

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