In June 2019, the company enters into a contract with a customer for a piece of equipment that requires the installation and includes a service contract. The total price of the contract is $250,000. Under the service contract, the company will service the equipment every six months for five years. The company estimates that the stand-alone selling price for the equipment, installation services, and service contract are $239,100, $10,000, and $15,900, respectively. The equipment was delivered, and the cash was received, on June 10, 2019, but the installation was not completed until July 1, 2019. The installation was required to integrate the equipment with other existing TNT equipment and required the technical expertise of TNT personnel. The first service call was made on December 31, 2019.

Q1: what is the journal entry, if any, the company would record related to this sale on (a) June 10, 2019, (b) July 1, 2019, (c), December 31, 2019, for the revenue part of the transaction Q2: If the company had estimated the stand-alone selling price of the equipment to be higher and the stand-alone selling price of the service contract to be lower, what impact would that have on the company’s a) income statement, b) balance sheet, and c) statement of cash flows for the year ended December 31, 2019?

Answer rating: 100% (QA)

Q1 a June 10 2019 On June 10 2019 the company would record the following journal entry to recognize ... View the full answer