Background Mix Master (MM) manufactures cordless mixers for use in the kitchens of consumers. MM sells to retailers, which sell the mixers to the ultimate consumer. One of MMs retail customers is Kitchen Hardware (KH). On January 1, MM sells to and receives payment from KH for 100 cordless mixers with a one-year warranty for $50 each. The mixers are delivered by MM to KH upon receipt of payment and the warranty is initiated at that time as well by MM. This warranty provides for a replacement of the mixer if the mixer fails to work properly within one year of the date of purchase. MM also sells its mixers with no warranty for $40 per unit. The cost to manufacture each mixer is $32. MM also provides its retail customers with sales incentives in the form of volume discounts on purchases of mixers with warranties paid at the end of an annual period. The agreement between MM and KH provides for the following volume discounts. Additionally, the probability of purchases for each volume level as estimated by MM is provided based on historical experience and forecasted sales.

Number of mixers	Discount	Probabiilty
Less than 1,000	0%	40%
1,000 through 1,999	5%	40%
2,000 or more	10%	20%

Requirements

Record all initial accounting entries for MM for the month of January based on the current guidance on revenue recognition in ASC 605. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries.

Review ASC 606-10-05-04, ASC 606-10-25, ASC 606-10-32-2 through 12, 25 through 31 and ASC 606-10-55-30 through 35. Prepare a detailed explanation of each of the five steps for revenue recognition and discuss how they apply to MM.

Record all initial accounting entries for MM for the month of January based on the new guidance on revenue recognition in ASC 606. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries.

What, if anything, is the difference in revenue recognized for the month of January under ASC 605 and ASC 606?