Sheridan Company manufactures equipment. Sheridan's products range from simple...
Exercise 5 - 11 Sheridan Company manufactures Equipment . Sheridan's products range from simple automated machinery to complex Systems containing numerous components . Unit Selling prices range from $ 400 , 000 to $ 1, 500, 000 , and are quoted inclusive of installation . The installation process does not involve changes to the features of the Equipment to perform to Specifications . Sheridan has the following arrangement with Winkerbean Inc . . Winkerbean purchases Equipment from Sheridan for a price of $ 1 , 050 , 0010 and contracts with Sheridan to install the equipment . Sheridan charges the same price for the equipment irrespective of whether it does the installation or not . The cost of the equipment is $ 500,000 . . Winkerbean is obligated to pay Sheridan the $ 1 , 050 , 000 upon delivery and installation of the Equipment . Sheridan delivers the equipment and completes the installation of the equipment on September 30 , 201 7 . The Equipment has a useful life of 10 years . Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately . Sheridan does not have market data with which to determine* the standalone selling price of the installation services . As a result , an expected cost plus margin approach is used . The cost of installation is $ 54 , 000 ; Sheridan prices these* services with a 25%' margin relative to cost . How should the transaction price of $ 1 , 050 , 000 be allocated among the service obligations ? ( Round intermediate calculations to $ decimal places , &.4. 0. 1234. Round final answers to O decimal places , E .J. 5, 275.) Equipment InstallationPrepare the journal Entries for Sheridan for this revenue arrangement in 2017 , assuming Sheridan receives payment when installation is completed . ( Credit account titles are automatically indented when the amount is Entered . Do not indent manually . If no entry is required , Select "NO Entry " for the account titles and enter ! for the amounts . Round answers to O decimal places , & .J. 5, 275.) Date Account Titles and Explanation Debit Credit September 30 , 2017 [ To record sales .! September 30 , 2017 [ To record cost of goods sold . ]Exercise 6-1 1 Accounts Payable Accounts Receivable Advertising Expense Allowance for Doubtful Accounts Cash Commission Expense Commission Revenue Construction Expenses Contract Assethiability Cost of Goods Sold Delivery Expense Estimated Inventory Returns Interest Expense Interest Income Interest Payable Interest Receivable Inventory Inventory on Consignment Loss due to Damaged Inventory Miscellaneous Expense No Entry Notes Receivable Refund Liability Rent Revenue Returned Inventory Revenue from Consignment Sales Revenue from LongTenn Contracts Sales Discounts Forfeited Sales Returns and Allowances Sales Revenue Service Revenue Service RevenueCommissions Unearned Revenue Unearned Warranty Revenue Utilities Expense Warranty Expense Warranty Liability Warranty Revenue
