Allocating Transaction Price to Performance Obligations and Recording Sales

On June 1, 2020, Forde Auto Manufacturer sells a 4-door sedan to a dealer for $102,000, which includes three years of maintenance. The standalone selling price of the vehicle is $102,000 and the standalone selling price of the maintenance contract is $6,800. In addition, Forde offered a $1,700 cash incentive (per vehicle purchased) to the dealer if the vehicle was purchased in the first week of June 2020.

a. How should the transaction price be allocated among the performance obligation(s) for sales made in the first week of June? b. Prepare Fordes journal entry to record the sale of vehicles for cash, assuming that dealers purchased 20 vehicles during the first week of June 2020. Ignore the cost of sales entries.

Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero). Note: Round each allocated transaction price in the table below to the nearest dollar.

a. Performance Obligations Vehicle Maintenance agreement Transaction Standalone Price Selling as Stated Price $ $ Allocated Transaction Price (rounded) $ $ $ $ b. Account Name Dr. Cr. Sales Revenue-Vehicles Check