E18-12. Allocate Transaction Price)( $410,000 on January 2, 2017. The sales pric

Question

E18-12. Allocate Transaction Price)( $410,000 on January 2, 2017. The sales price includes an installation fee, which has a standalone selling price of $40,000. The standalone selling price of the goods is $370,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete Instructions (a) Prepare the journal entries (if any) to record the sale on January 2, 2017. (b) Shaw prepares an income statement for the first quarter of 2017, ending on March 31, 2017 (installation was completed on June 18, 2017). How much revenue should Shaw recognize related to its sale to Ricard?

Explanation / Answer

Req a: Journal Entries: Date Accounts title and explanations Debit $ Credit $ 2-Jan Cash Account Dr. 410,000        Sales revenue Account 370,000        Unearned installation fees 40,000 Req b: Total Uuneaned Installation fees 40000 Total period lag for installation 6 months Period expired on mar31 3 months Therefore, Installation fees to be recognized on Mar31 = 40000/6*3 = 20,000 Entry: 31-Mar Unearned Installation fees Dr. 20,000        Installation service revenue 20,000

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