Question

1. On January 1, 2020, Jim Beam Company sold goods to a customer and received a non interest bearing installment note requiring payments of $15,000 annually for six years. The first payment was received by Jim Beam Company on January 1, 2020. The prevailing rate of interest for this type of note is 8%.The total sales revenue Jim Beam Company would record for this sale on January 1, 2020 is :

A)$90,000

B) $69,343

C) $74,891

D)$15,000

2. Johnnie Walker sells a product that involves two separate performance obligations: the WhiskyRight distillery kit and the WhiskyCoach teaching software. WhiskyRight has a stand-alone selling price of $150. Johnnie Walkersells both the WhiskyRight and the WhiskyCoach as a package deal for $200.The WhiskyCoach software is not sold separately. Using the residual approach, how much of the package deal selling price would get allocated to the WhiskyCoach teaching software?

A)$80.00

B) $50.00

C) $90.00

D)$97.50

3. Beefeater Inc. sells fast-food franchises. Beefeater receives $75,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $75,000. Beefeater also receives $36,000 per year for use of the Beefeater name and for ongoing consulting services (starting on the date the franchise is purchased). Seagram became a Beefeater franchisee on March 1, 2020, and on May 1, 2020 Seagram had completed training and was open for business. How much revenue in 2020 will Beefeater recognize for its arrangement with Seagram?

A)$75,000

B) $99,000

C) $105,000

D)$111,000

4. On June 1st, Michelob signed up and paid $1,200 to Master Brewer Inc. for a 6 month brewing course that started on the same date. As of July 31st, Master Brewer's accounting records would indicate:

A)$400 of revenue, $800 of accounts receivable

B) $400 of revenue, $800 of deferred revenue

C) $1,200 of revenue, $1,200 of cash

D)$800 of revenue, $400 of accounts receivable

5. On June 1, 2021, Coors Property Management entered into a 2-year contract to oversee leasing and maintenance for an apartment building. The contract starts on July 1, 2021. Under the terms of the contract, Coors will be paid a fixed fee of $50,000 per year and will receive an additional 15% of the fixed fee at the end of each year provided that building occupancy exceeds 90%. Coors estimates a 30% chance it will exceed the occupancy threshold, and concludes that revenue recognition over time is appropriate for this contract. Assume Coors estimates variable consideration as the expected value. How much revenue should Coorsrecognize on this contract in 2021?

A) $25,000

B) $26,125

C) $28,750

D) $50,000

Answer 1

As per HomeworkLib policy, I'm obliged to answer only first complete question. Kindly ask the remaining questions in a seperate question.

1) total sales revenue = present value of all installments

Present value of all installments = annual installment * present value annuity due factor (8%, 6 periods)

Present value of all installments = $15,000 * 4.99271

Present value of all installments = $74,891

Hence, the sales revenue to be recorded is $74,891

Hence, the correct answer is C) $74,891