Question

please show work if possible

On March 1, 2021, Gold Examiner receives $166,000 from a local bank and promises to deliver 100 units of certified 1-oz. gold bars on a future date. The contract states that ownership passes to the bank when Gold Examiner delivers the products to Brink's, a third-party carrier. In addition, Gold Examiner has agreed to provide a replacement shipment at no additional cost if the product is lost in transit. The stand-alone price of a gold bar is $1,577 per unit, and Gold Examiner estimates the stand-alone price of the replacement insurance service to be $83 per unit. Brink's picked up the gold bars from Gold Examiner on March 30, and delivery to the bank occurred on April 1. Required: 1. How many performance obligations are in this contract? 2. to 4. Prepare the journal entry Gold Examiner would record on March 1, March 30 and April 1.

Answer 1

Answer:

1.) Number of performance obligations in the contract is 2.

2. to 4.)

Date	Particulars	Debit ($)	Credit ($)
March 01, 2018	Cash	$166,000
	Deferred revenue—gold bars (166000/166000)*157700		$157700
	Deferred revenue—insurance (166000/166000)*8300		$8300
March 30, 2018	Deferred revenue—gold bars	$157,700
	Sales revenue		$157,700
April 01, 2018	Deferred revenue—insurance	$8,300
	Service revenue		$8,300

Working Notes:

Value of the gold bars =1577*100= 157700
Standalone selling price of the insurance = 83*100 = 8300
Total of standalone prices = 166000