TheApplianceStoreisanexperiencedhomeappliancedealer.ApplianceStorealsooffersanumber ofservicestogetherwiththehomeappliancesthatitsells.AssumethatApplianceStoresells dishwashersonastandalonebasis.ApplianceStorealsosellsinstallationservicesandmaintenance servicesfordishwashers.However,ApplianceStoredoesnot offerinstallationormaintenance services to customers who buy dishwashers from other vendors. Pricing for dishwashers is as follows:

Dishwasheronly $950 DishwasherwithInstallationservice $1,050 Dishwasherwithmaintenanceservices $1,150 Dishwasherwithinstallationandmaintenanceservices $1,200

Ineachinstanceinwhichmaintenanceservicesareprovided,themaintenanceserviceisseparately pricedwithinthearrangementat$200.Dishwashersaresoldsubjecttoageneralrightofreturn.Ifa customerpurchasesadishwasherwithinstallationand/ormaintenanceservices,intheeventthe ApplianceStoredoesnotcompletetheservicesatisfactorily,thecustomerisonlyentitledtoa refundoftheportionofthefeethatexceeds$800.

Required

a) Assumethatacustomerpurchasesadishwasherwithbothinstallationandmaintenance servicesfor$1,200.Basedonitsexperience,ApplianceStorebelievesthatitisprobablethat theinstallationoftheequipmentwillbeperformedsatisfactorilytothecustomer.Assume thatthemaintenanceservicesarepricedseparately.Identifytheseparateperformance obligationsrelatedtotheApplianceStorerevenuearrangement. 4marks b) Indicatetheamountofrevenuethatshouldbeallocatedtothedishwasher,theinstallation, andtothemaintenancecontract. 4marks c) PreparethenecessaryjournalentryfortheApplianceStore.