Question: Problem 4: Johnson & Sons specializes in selling upscale home electronic systems. As a package deal, Johnson sells a premium home entertainment package that includes

Problem 4: Johnson & Sons specializes in selling upscale home electronic systems. As a package deal, Johnson sells a premium home entertainment package that includes a big screen tv, installation services, and a one-year extended warranty for $10,000. If purchased on their own, Johnson sells this particular big screen tv for $8,000, installation services for $2,500, and extended warranty for $1,500. Note that all of these items can be purchased separately. In other words, a customer can choose not to purchase the installation services or the extended warranty. On March 1, 2020, Johnson delivers a premium home entertainment package to Valley Hills Nursing Home, which includes the big screen tv, installation services, and the one-year extended warranty. On April 15, 2020, Johnson receives $10,000 from Valley Hills Nursing Home.

Required:

1. Identify the performance obligation(s) in the premium home entertainment package?

2. How much revenue will be allocated to each performance obligation?

3. What journal entry (if any) will Johnson record on March 1, 2020 to record the delivery of the home entertainment package to the nursing home?

4. What journal entry (if any) will Johnson record on March 31, 2020?

5. What journal entry will Johnson record when they receive payment from Valley Hills Nursing Home?

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