Question

Dominum Corp is a mining company that mines, produces and markets teledine, a common mineral substance. The mineral is mined and produced in one large batch per year, as the mine is accessible only for a brief period in the summer due to severe weather conditions at the mine site. Dominum has an advance purchases contract with one customer that takes all of Dominum's output each year. The agreement allows the customer to r defective product for up to 60 days from the date of delivery. transaction in 20X6 were.

30 August 186,000 tonnes of teledine ore removed from mine, at a cost of $4,300,000.

30 September All of the ore refined to 115,000 tonnes of telefdine, at a cost of $640,000. A deposit is received from the customer for $1,350,000(10% of the contract amount).

15 October All of the teledine delivered to the customer, total contract price, $1,350,000, At this point, 50% of the contract amount is received. Dominum estimate from historical experience, that 7% of the goods might be returned.

25 November Five percent of the teledine is returned for full credit, ore had been improperly refined and the teledine was unusable, the customer is given full credit for $675,000 and the unusable teledine scrapped. No other returns are anticipated.

30 November Customer fully paid the final amount owing.

1. Assets the five steps revenue recognition and determine when the performance obligation is complete. Prepare all the journal entries record these events.

2. If the customer instead asked for Dominum to hold onto 30% of the production until the customer asked for delivery. how would the journal entries requirement 1 change?

Answer 1

1)--

2)--