Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I wana the answer of the case study Case Study - Model B - Alharam Company sells Alumtal doors and windows. In addition providing accessories,

image text in transcribed

I wana the answer of the case study

Case Study - Model B - Alharam Company sells Alumtal doors and windows. In addition providing accessories, installation and maintenance services. Alharam Company performed the following revenue transactions during 2019: a- Al Mohaned Co. enters into a contract with Alharam Co. to purchase 600 doors during 2019. The doors are priced at $5000 each (with a cost of $3500 each), and Alharam Co. provides a 5% volume discount if Al Mohaned Co. purchases at least 450 machines. Based on prior experience with the transactions with Al Mohaned Co., the Co. will meet the discount threshold. On March 25, 2019, Alharam Co. sold and delivered in account 200 machines to Al Mohaned Co. and recorded sales net. On May 8, 2019 Alharam Co. received the payment from Al Mohaned Co. (assume Al Mohaned Co. fails to meet the discount threshold). b- Alharam Company offers contract BV601, which is comprised of a free-standing window plus maintenance service for one year to a customer for a total price $3000. On a standalone basis, the window sells for $4000 (cost $2600), and Alharam Co. estimates that the standalone selling price of the maintenance service is $1000. Note that maintenance service can be performed by other companies. On June 20, 2019, Alharam Co. signed BV601 contract and delivered a window to Alfahd Co. The customer paid the contract price in cash on the same date. On December, 31 2019, maintenance service is performed. C-On October 1, 2019, Alharam sold and delivered 3 doors to a builder for $40,000. The builder plans to install it in one of its "Parade of Homes houses. Alharam accepted a 5-year, zero- interest bearing note with face amount of $53,240. The doors have cost of $25,500. An interest rate of 10% is an appropriate market rate of interest for this customer. 1 Instructions: 1- Apply the five steps of revenue recognition process for the previous transactions , write your answer in a table as follows: write your answer in a table as follows: (3 marks) Transaction number Step1: Identify the contract with customers. Step 2: Identify the separate performance obligations in the contract Step3: Determine the transaction price Step4: Allocate the transaction price to the separate performance obligations Step5: Recognize revenue when each performance obligation is satisfied (a) (b) (C) 2- Prepare the needed entries to record the previous transactions in Alharam books during 2019. (8.5 marks). 3- Prepare income statement and statement of financial position (for only the sections that are affected by these transactions) to reflect the effects of previous transactions on them. (3.5 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Management A Strategic Emphasis

Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins

6th Edition

78025532, 978-0077523732, 77523733, 978-0078025532

More Books

Students also viewed these Accounting questions

Question

12.6 Analyze the emerging emphasis on employee recognition.

Answered: 1 week ago