Question
In: Accounting
Carla Vista Company manufactures equipment. Carla Vista’s products range from simple automated machinery to complex systems...
Carla Vista Company manufactures equipment. Carla Vista’s
products range from simple automated machinery to complex systems
containing numerous components. Unit selling prices range from
$235,000 to $1,620,000, and are quoted inclusive of installation.
The installation process does not involve changes to the features
of the equipment to perform to specifications. Carla Vista has the
following arrangement with Winkerbean Inc.
| • | Winkerbean purchases equipment from Carla Vista on May 2, 2020, for a price of $1,100,000 and contracts with Carla Vista to install the equipment. Carla Vista charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Carla Vista determines that the installation service is estimated to have a fair value of $60,000. The cost of the equipment is $600,000. | |
| • | Winkerbean is obligated to pay Carla Vista the $1,060,000 upon delivery of the equipment and the balance on the completion of the installation |
Carla Vista delivers the equipment on June 1, 2020, and completes
the installation of the equipment on September 30, 2020. Assume
that the equipment and the installation are two distinct
performance obligations that should be accounted for
separately.
a) Prepare any journal entries for Carla Vista on May 2, June 1, and September 30, 2020.
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
| May 2, | ||||
|
||||
|
(To record sales) |
||||
| June 1, | ||||
|
(To record cost of goods sold) |
||||
| September 30, 2020 | ||||
Solutions
Expert Solution
Working:
| Performance Obligation | Standalone Selling Price | Percent of Total Standalone Seling Price | Allocated Transaction Price |
| Sale of equipment | 1100000 | 94.83% | 1043103 |
| Installation service | 60000 | 5.17% | 56897 |
| Total | 1160000 | 100.00% | 1100000 |
Kindly round off as required since no instructions provided with the question regarding rounding off. Any other rounding off will cause the answers to vary. For any clarifications, write under the comments section.
| Date | Account Titles and Explanation | Debit | Credit |
| May 2, 2020 | No journal entry required | ||
| June 1, 2020 | Cash | 1060000 | |
| Sales revenue | 1043103 | ||
| Unearned service revenue | 16897 | ||
| (To record sales) | |||
| June 1, 2020 | Cost of goods sold | 600000 | |
| Inventory | 600000 | ||
| (To record cost of goods sold) | |||
| September 30, 2020 | Cash ($1100000 - $1060000) | 40000 | |
| Unearned service revenue | 16897 | ||
| Service revenue | 56897 | ||
| (To record service revenue) |
ekkarill92 answered 1 year agoRelated Solutions
Metlock Company manufactures equipment. Metlock’s products range from simple automated machinery to complex systems containing numerous...
Metlock Company manufactures equipment. Metlock’s products range
from simple automated machinery to complex systems containing
numerous components. Unit selling prices range from $200,000 to
$1,500,000 and are quoted inclusive of installation. The
installation process does not involve changes to the features of
the equipment and does not require proprietary information about
the equipment in order for the installed equipment to perform to
specifications. Metlock has the following arrangement with
Winkerbean Inc.
●
Winkerbean purchases equipment from
Metlock for a price...
Culver Company manufactures equipment. Culver’s products range from simple automated machinery to complex systems containing numerous...
Culver Company manufactures equipment. Culver’s products range
from simple automated machinery to complex systems containing
numerous components. Unit selling prices range from $200,000 to
$1,500,000 and are quoted inclusive of installation. The
installation process does not involve changes to the features of
the equipment and does not require proprietary information about
the equipment in order for the installed equipment to perform to
specifications. Culver has the following arrangement with
Winkerbean Inc.
●
Winkerbean purchases equipment from Culver for a price...
Ace Company manufactures equipment. Ace’s products range from simple automated machinery to complex systems containing numerous...
Ace Company manufactures equipment. Ace’s products range from
simple automated machinery to complex systems containing numerous
components. Unit selling prices range from $130,000 to $1,100,000
and are quoted inclusive of installation. The installation process
does NOT involve changes to the features of the equipment to
perform specifications. Ace has the following relationship with
Rose Inc.
Rose can purchase equipment from Ace for a price of $500,000
and contracts with Ace to install the equipment. Using market data,
Rose determines installation...
Flint Company manufactures equipment. Flint’s products range from simple automated machinery to complex systems containing numerous...
Flint Company manufactures equipment. Flint’s products range
from simple automated machinery to complex systems containing
numerous components. Unit selling prices range from $200,000 to
$1,500,000 and are quoted inclusive of installation. The
installation process does not involve changes to the features of
the equipment and does not require proprietary information about
the equipment in order for the installed equipment to perform to
specifications. Flint has the following arrangement with Winkerbean
Inc.
● Winkerbean purchases equipment from Flint for a price...
Tamarisk Company manufactures equipment. Tamarisk’s products range from simple automated machinery to complex systems containing numerous...
Tamarisk Company manufactures equipment. Tamarisk’s products
range from simple automated machinery to complex systems containing
numerous components. Unit selling prices range from $200,000 to
$1,500,000 and are quoted inclusive of installation. The
installation process does not involve changes to the features of
the equipment and does not require proprietary information about
the equipment in order for the installed equipment to perform to
specifications. Tamarisk has the following arrangement with
Winkerbean Inc.
●
Winkerbean purchases equipment from Tamarisk for a price...
Indigo Company manufactures equipment. Indigo’s products range from simple automated machinery to complex systems containing numerous...
Indigo Company manufactures equipment. Indigo’s products range
from simple automated machinery to complex systems containing
numerous components. Unit selling prices range from $200,000 to
$1,500,000 and are quoted inclusive of installation. The
installation process does not involve changes to the features of
the equipment and does not require proprietary information about
the equipment in order for the installed equipment to perform to
specifications. Indigo has the following arrangement with
Winkerbean Inc.
●
Winkerbean purchases equipment from Indigo for a price...
Indigo Company manufactures equipment. Indigo’s products range from simple automated machinery to complex systems containing numerous...
Indigo Company manufactures equipment. Indigo’s products range
from simple automated machinery to complex systems containing
numerous components. Unit selling prices range from $200,000 to
$1,500,000 and are quoted inclusive of installation. The
installation process does not involve changes to the features of
the equipment and does not require proprietary information about
the equipment in order for the installed equipment to perform to
specifications. Indigo has the following arrangement with
Winkerbean Inc.
●
Winkerbean purchases equipment from Indigo for a price...
Nash Company manufactures equipment. Nash’s products range from simple automated machinery to complex systems containing numerous...
Nash Company manufactures equipment. Nash’s products range from
simple automated machinery to complex systems containing numerous
components. Unit selling prices range from $200,000 to $1,500,000
and are quoted inclusive of installation. The installation process
does not involve changes to the features of the equipment and does
not require proprietary information about the equipment in order
for the installed equipment to perform to specifications. Nash has
the following arrangement with Winkerbean Inc.
●
Winkerbean purchases equipment from Nash for a price...
Carla Vista Company manufactures one product. On December 31, 2019, Carla Vista adopted the dollar-value LIFO...
Carla Vista Company manufactures one product. On December 31,
2019, Carla Vista adopted the dollar-value LIFO inventory method.
The inventory on that date using the dollar-value LIFO inventory
method was $960,000. Inventory data are as follows:
Year
Inventory at
year-end prices
Price index
(base year 2019)
2020
$1,285,200
1.05
2021
1,840,000
1.15
2022
1,930,000
1.25
Compute the inventory at December 31, 2020, 2021, and
2022, using the dollar-value LIFO method for each year.
Inventory at December 31, 2020
Inventory at...
Shown below are comparative balance sheets for Carla Vista Company. Carla Vista Company Comparative Balance Sheets...
Shown below are comparative balance sheets for Carla Vista
Company.
Carla Vista Company
Comparative Balance Sheets
December 31
Assets
2022
2021
Cash
$ 170,000
$ 55,000
Accounts receivable
220,000
190,000
Inventory
417,500
472,500
Land
200,000
250,000
Equipment
650,000
500,000
Accumulated depreciation—equipment
(165,000
)
(80,000
)
Total
$1,492,500
$1,387,500
Liabilities and Stockholders’ Equity
Accounts payable
$ 97,500
$ 107,500
Bonds payable
375,000
500,000
Common stock ($1 par)
540,000
435,000
Retained earnings
480,000
345,000
Total
$1,492,500
$1,387,500
Additional information:
1.
Net income...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- What is the difference among the principles of modularization, abstraction, encapsulation, and separation of interface and...
- An investment project costs $20,100 and has annual cash flows of $4,400 for six years. ...
- PUT IN JAVA PROGRAMMING The StockB class: Design a class named StockB that contains the following...
- Draw a DFA for the following ( ∑ = {0,1}): Set of all strings with.
- In the article from Forbes notes that the goal of a leader is not to clone...
- Many people keep time using a 24 hour clock (11 is 11am and 23 is 11pm,...
- UNIX ONLY -- DIFFICULT LAB ASSIGNMENT This is an extremely difficult subject for me. Could you...
ADVERTISEMENT