Question

Print Platon Allocating Transaction Price to Performance Obligations and Recording Sales Value Dealership in markets and sells the vehicles to real customers. Along with a new vehicle purchase, a customer will receive a free annual maintenance contract for one year from the date of purchase. The standalone seling price of a vehicles 130,000 and the standalone selling price for the annual maintenance contract is 3500 During October 2020, Valur Dealership Inc sold vehicles for 530,250 per vehicle, each with a free annual manance contract When answering the following questions • Round each located transaction prke to the nearest dollar If a journal entry for a line of the journalist required for the transaction, select the account name and leave the Dr. and Cranswers blanker agroring the cost entries, record the journal entry in October 2020 for Vale Dealership's sale of vehicles with the shared maintenance contracts to customers. Trans Sandalen Alice Performance Price as Selling Cigations Sated Prike Dreunde Au contract Account Name G Sleeve 0 + 2. Assume the same information above except the standalone seling price of the annual maintenance is not known because this was the first time Value Dealership offered the service Value Dealership is uncertain as to what services on average, a customer will advantage of during the year of the contract. The Dealership researthed prices and determined that the average selling price for a maintenance service contact is so trong the countries record the jour entry in October 2000 for Vale Dealership's sale of vehicles to its customers Performance Obligation Transaction Mandal Selling Started Prie Allied Transaction Price DB AN Sales

Answer 1

a.

Performance Obligations	Transaction Price as Stated	Standalone Selling Price	Allocated Transaction Price
Vehicle	30250	30000	29754
Annual maintenance contract	30250	500	496
	30250	30500	30250

Account Name	Dr.	Cr.
Cash (48 x $30250)	1452000
Sales Revenue-Vehicle (48 x $29754)		1428192
Unearned Service Revenue (48 x $496)		23808

b.

Performance Obligations	Transaction Price as Stated	Standalone Selling Price	Allocated Transaction Price
Vehicle	30250	30000	29608
Annual maintenance contract	30250	650	642
	30250	30650	30250

Account Name	Dr.	Cr.
Cash (48 x $30250)	1452000
Sales Revenue-Vehicle (48 x $29608)		1421184
Unearned Service Revenue (48 x $642)		30816

c.

Performance Obligations	Transaction Price as Stated	Standalone Selling Price	Allocated Transaction Price
Vehicle	30250	30000	29715
Annual maintenance contract*	30250	540	535
	30250	30540	30250

*AMC-Standalone selling price = $400 + (35% x $400) = $540

Account Name	Dr.	Cr.
Cash (48 x $30250)	1452000
Sales Revenue-Vehicle (48 x $29715)		1426320
Unearned Service Revenue (48 x $535)		25680