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Name: Date: 1. Allocate transaction price. The Appliance Store is an experienced home appliance dealer. Appliance Store also
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Answer #1

(a)

For purpose of revenue realization, each economic event has to be considered separately. The delivery of dishwasher to customer will enable the business to recognize for the  revenue from sale of dish washer. Where as Installation charges can be accounted only at the time of satisfactorily completing the installation.

The maintenance service charges needs to deferred until the event of maintenance occurs or on the date on which contractual maintenance period ends.

(b)

Revenue on Dishwasher sales = $1,140.00

Revenue from Installation = Dishwasher with Installation - Dishwasher = $1,260.00 - $1,140.00 =$120.00

Revenue from Maintenance services = 240

When a customer opts for Dishwasher with installation and maintenance service the amount charged is $1,450.00 which is $50.00 less than ($1,140.00+$120.00+$240.00 ) $1,500.00

The discount of 50 needs to accounted separately.at the event of all the components provided to customer at the time of sales of dishwasher.

(c)

Date Particulars Debit Credit
Accounts Receivable $1,450.00
Discount Allowed $50.00
Revenue - Sale Dishwasher $1,140.00
Revenue - Installation $120.00
Deferred Revenue - Maintenance services $240.00
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