Q3- Please write all of the journal entries for 2022 the New Mexico Computing Contract. Your...
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Q3- Please write all of the journal entries for 2022 the New Mexico Computing Contract. Your company name is PP. See below information: On July 1st, 2022, PP signed a contract with New Mexico Computing. PP will provide New Mexico with 525 scooters, for $605 each. New Mexico did not purchase the service agreement. PP will deliver the scooters in 2 years, on July 1st. New Mexico paid PP the full amount on July 1 of the current year (2022). ⇒ The analysis of the first four steps in the revenue recognition process are below: New Mexico Contract: Units Price Contract Price Step 1: Step 2: Step 3: Future Value Transaction Price Transaction Price per Scooter 525 605 317.625 Step 4: Contract exists Only 1 performance obligation Determine transaction price - need to compute financing component Compute future value of $317,625; 2 periods at 6% interest. 356,883 356,883 679.78 Only 1 performance obligation → Use the "Contract Liability" account for any interest that accrues (similar to an interest payable account). Q3- Please write all of the journal entries for 2022 the New Mexico Computing Contract. Your company name is PP. See below information: On July 1st, 2022, PP signed a contract with New Mexico Computing. PP will provide New Mexico with 525 scooters, for $605 each. New Mexico did not purchase the service agreement. PP will deliver the scooters in 2 years, on July 1st. New Mexico paid PP the full amount on July 1 of the current year (2022). ⇒ The analysis of the first four steps in the revenue recognition process are below: New Mexico Contract: Units Price Contract Price Step 1: Step 2: Step 3: Future Value Transaction Price Transaction Price per Scooter 525 605 317.625 Step 4: Contract exists Only 1 performance obligation Determine transaction price - need to compute financing component Compute future value of $317,625; 2 periods at 6% interest. 356,883 356,883 679.78 Only 1 performance obligation → Use the "Contract Liability" account for any interest that accrues (similar to an interest payable account).
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To record the journal entries for the New Mexico Computing Contract in 2022 we need to consider the ... View the full answer
Related Book For
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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