Home Plus is a leading home appliance dealer and retailer. providing a range of affordable home...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Home Plus is a leading home appliance dealer and retailer. providing a range of affordable home appliances with services. The company has the following independent transactions in 2021. Part A (24 marks) Home Plus sells dishwashers on a standalone basis at $8,000 (with a cost of $5,000 each). Customers can choose Home Plus for installation and maintenance. The installation process does not involve changes in the dishwashers, so this service can be provided by other vendors. Home Plus charges $500 for the installation service, an approximate amount charged by independent third parties. A two-year maintenance service is separately priced at $1,500. On March 1, 2021, a customer purchases a dishwasher with both installation and maintenance services for $8,000. The maintenance covers from April 1, 2021 to March 31, 2023. The contract specifies that the full payment of $8,000 shall be made once the dishwasher is delivered and installed. The dishwasher was delivered on March 28, 2021 and was installed on March 29, 2021 respectively. Home Plus received the cash payment from the customer on April 1, 2021. Home Plus has a year-end date on each December 31. Requirement: (6 marks) A.1 Discuss and identify the performance obligations within the contract. A.2 Allocate the transaction price to each performance obligation within the contract. (6 marks) A3 Prepare the journal entries for Home Plus for 2021, in regard to this contract. Use separate accounts for sales revenue and service revenue. (12 marks) Part B (11 marks) On January 1, 2021, Home Plus shipped 20 wireless vacuums on consignment to Clean Outlet, Inc. The cost of each vacuum was $3,500. The cost of shipping the vacuums amounted to $1,800 and was paid for by Home Plus on January 15, 2021. Once received the wireless vacuums, Clean Outlet paid for installation and setup costs of $3,900 on January 20, 2021. On January 25, 2021, Clean Outlet paid an advertising of $3,000 to promote the vacuums on social media. Both the installation and setup costs and the advertising are reimbursable from Home Plus. Clean Outlet sold 15 vacuums at $5,500 each during February. On February 28, 2021, Clean Outlet reported to Home Plus the sales, retained a 6% commission and remitted the cash due to Home Plus. Requirement: B. Prepare journal entries for Home Plus during January to February of 2021. (11 marks) Home Plus is a leading home appliance dealer and retailer. providing a range of affordable home appliances with services. The company has the following independent transactions in 2021. Part A (24 marks) Home Plus sells dishwashers on a standalone basis at $8,000 (with a cost of $5,000 each). Customers can choose Home Plus for installation and maintenance. The installation process does not involve changes in the dishwashers, so this service can be provided by other vendors. Home Plus charges $500 for the installation service, an approximate amount charged by independent third parties. A two-year maintenance service is separately priced at $1,500. On March 1, 2021, a customer purchases a dishwasher with both installation and maintenance services for $8,000. The maintenance covers from April 1, 2021 to March 31, 2023. The contract specifies that the full payment of $8,000 shall be made once the dishwasher is delivered and installed. The dishwasher was delivered on March 28, 2021 and was installed on March 29, 2021 respectively. Home Plus received the cash payment from the customer on April 1, 2021. Home Plus has a year-end date on each December 31. Requirement: (6 marks) A.1 Discuss and identify the performance obligations within the contract. A.2 Allocate the transaction price to each performance obligation within the contract. (6 marks) A3 Prepare the journal entries for Home Plus for 2021, in regard to this contract. Use separate accounts for sales revenue and service revenue. (12 marks) Part B (11 marks) On January 1, 2021, Home Plus shipped 20 wireless vacuums on consignment to Clean Outlet, Inc. The cost of each vacuum was $3,500. The cost of shipping the vacuums amounted to $1,800 and was paid for by Home Plus on January 15, 2021. Once received the wireless vacuums, Clean Outlet paid for installation and setup costs of $3,900 on January 20, 2021. On January 25, 2021, Clean Outlet paid an advertising of $3,000 to promote the vacuums on social media. Both the installation and setup costs and the advertising are reimbursable from Home Plus. Clean Outlet sold 15 vacuums at $5,500 each during February. On February 28, 2021, Clean Outlet reported to Home Plus the sales, retained a 6% commission and remitted the cash due to Home Plus. Requirement: B. Prepare journal entries for Home Plus during January to February of 2021. (11 marks)
Expert Answer:
Answer rating: 100% (QA)
Part A A1 Performance obligations within the contract Based on the information provided there are two distinct performance obligations within the cont... View the full answer
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
i). The new revenue accounting standard IFRS 15 outlines a five-step process for revenue recognition, the third step is to determine the transaction price. Required On what basis should the...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
The Quality Athletics Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product AccuDriver, a golf club that uses global...
-
Hydroxylation of trans-2-butene with OsO4 also yields 2, 3-butanediol. What stereochemistry do you expect for the product?
-
Compressed natural gas (CNG) is contained in a rigid tank near room temperature (300 K) and with a pressure of 6.75 MPa. CNG is cooled until it just starts to condense. Assuming the CNG can be...
-
What are some of the connections between the arts and personal identities?
-
You were appointed the manager of Drive Systems Division (DSD) at Tunes2Go, a manufacturer of portable music devices using the latest developments in hard drive technology, on December 15 last year....
-
The company has spent 5.75m in the last twenty-four months on this unique smart television set called the Boxe, and initial tests carried out have confirmed its technical viability and the directors...
-
George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child,...
-
"Beginning Transactions" on the first Excel worksheet will provide the Balance Sheet for 2019 and the Transactions for January 2020. On the second Excel worksheet, "Journal Entries" , you should...
-
Explain how "accidents" are related to "torts" and how businesses, by reducing "accidents" can manage their legal liability. Tell me, how can an intentional tort, be an unintentional tort?
-
What financial help can the FAFSA do for someone who has an income of 36,000 a year?
-
The 'Crown Casino Responsible Gambling' Case In 2022, Crown Casino (Melbourne) were ordered to pay AUD$120 million in fines for breaches of responsible gambling regulations in Victoria, Australia....
-
The data below are for Minersville Company. Total Assets $10,000 Income Tax Expense 1,000 Accounts Receivable 2,500 Total Equity 6,500 Interest Expense 400 Sales15,000 15,000 Cost of Goods Sold 9,000...
-
What type of conflict is happening if two teams in the same accounting department have a dispute with each other?
-
1. Using a detailed graph, determine the breakeven point, assuming the selling price of a product is $100, fixed costs are $8,000, variable costs per unit are $20, and operating income is $32,000 2....
-
Why can wastewater treatment requirements in Hawaii be less stringent than those in most locations on the U.S. mainland?
-
Presented below are various account balances. a. Bank loans payable of a winery, due March 10, 2022. (The product requires aging for 5 years before sale.) b. Serial bonds payable, 1,000,000, of which...
-
The financial statements of M&S (GBR) are presented in Appendix A. The company's complete annual report, including the notes to the financial statements, is available online. Instructions a. What...
-
Tina Bailey, a student of intermediate accounting, was heard to remark after a class discussion on segment reporting, All this is very confusing to me. First we are told that there is merit in...
-
Trust Management System: A university would like to develop a system for students to evaluate their peers performance in some group projects. Students ratings in various categories will affect a...
-
Building trust in potential students to join music classes by a music teacher a. Explain the above scenario. b. Draw a class diagram for it. c. Document a detailed and significant use case. d. Create...
-
Building trust in parents by hostel authorities to state that hostel is safe for students to live a. Explain the above scenario. b. Draw a class diagram for it. c. Document a detailed and significant...
Study smarter with the SolutionInn App