SHOW LIST OF ACCOUNTS Account Titles and Explanation Debit Credit The Appliance
ID: 2521522 • Letter: S
Question
SHOW LIST OF ACCOUNTS
Account Titles and Explanation
Debit
Credit
The Appliance Store is an experienced home appliance dealer. Appliance Store also offers a number of services together with the home appliances that it sells. Assume that Appliance Store sells dishwashers on a standalone basis. Appliance Store also sells installation services and maintenance services for dishwashers. However, Appliance Store does not offer installation or maintenance services to customers who buy dishwashers from other vendors. Standalone selling prices for dishwashers, installation, and maintenance are as follows..Dishwasher only $1,270 Installation service 120 Maintenance services 240 Dishwasher with installation and maintenance services 1,580
In each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $320. Additionally, the incremental amount charged by Appliance Store for installation approximates the amount charged by independent third parties. Dishwashers are sold subject to a general right of return. If a customer purchases a dishwasher with installation and/or maintenance services, in the event Appliance Store does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $1,270.
Explanation / Answer
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1. the amount of revenue that should be allocated to the dishwasher the installation, and to the maintenance contract. Standalone Price Ratio - Standalone Price/1630 Revenue by Product (1580*Ratio) Dishwasher 1270 78% 1231 Installation 120 7% 116 Maintenance 240 15% 233 Total 1630 100% 1580 Journal Entry Cash Account Debit 1580 to Revenue-Dishwasher 1231 to Revenue-Installation 116 to Maintenance 233Related Questions
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