Sam Baker Enters into a Contract with Pit Company to Purchase

question 67

Multiple Choice

Sam Baker enters into a contract with Pit Company to purchase a gas fireplace unit. The sale agreement is for a total price of $ 3,000 and includes delivery of the unit, installation, and a two-year warranty. Installation successfully occurred on November 1, 2021. Pit Company often sells this gas fireplace for $ 2,500 and offers installation and warranty services at $ 500 and $ 300, respectively. Using the stand-alone fair values, what amount would be recorded as revenue on November 1, 2021 under the contract-based approach to revenue recognition? Round to the nearest whole dollar.

• A) $ 2,727
• B) $ 2,500
• C) $ 2,273
• D) $ 3,000

---

Definitions:

Typed Signature

A digital or electronic representation of a person's handwritten signature.

Zip Codes

A system of postal codes used by the United States Postal Service to ensure mail is delivered to the correct geographic region efficiently.

Sender's Name

The name of the individual or entity sending a letter, package, or email, typically indicated at the beginning or end of the message.

Closing

The finalization or completion of a transaction, agreement, or period of time.