On March 1, 2021, Gold Examiner receives $153,000 from a local bank and promises to deliver 100 units of certified 1-oz. gold bars on a future date. The contract states that ownership passes to the bank when Gold Examiner delivers the products to Brink’s, a third-party carrier. In addition, Gold Examiner has agreed to provide a replacement shipment at no additional cost if the product is lost in transit. The stand-alone price of a gold bar is $1,463 per unit, and Gold Examiner estimates the stand-alone price of the replacement insurance service to be $77 per unit. Brink’s picked up the gold bars from Gold Examiner on March 30, and delivery to the bank occurred on April 1.
 
 Required:
 1. How many performance obligations are in this contract?
 2. to 4. Prepare the journal entry Gold Examiner would record on March 1, March 30 and April 1.

 

2.

Clarks Inc., a shoe retailer, sells boots in different styles. In early November the company starts selling “SunBoots” to customers for $65 per pair. When a customer purchases a pair of SunBoots, Clarks also gives the customer a 30% discount coupon for any additional future purchases made in the next 30 days. Customers can’t obtain the discount coupon otherwise. Clarks anticipates that approximately 20% of customers will utilize the coupon, and that on average those customers will purchase additional goods that normally sell for $140.

Required:

1. How many performance obligations are in a contract to buy a pair of SunBoots?

2. Prepare a journal entry to record revenue for the sale of 1,000 pairs of SunBoots, assuming that Clarks uses the residual method to estimate the stand-alone selling price of SunBoots sold without the discount coupon.

Answer rating: 100% (QA)

How many performance obligations are in this contract In this contract there are two performance obl... View the full answer