DGA Associates,Inc

question 315

Essay

DGA Associates,Inc.sells computer workstations designed for architects.In 2016,it sold 120 workstations for $360,000.For each workstation sold,DGA distributed a 40% discount coupon for any additional future purchases made in the next 12 months.Based on historical experience,DGA expects that approximately 30% of the coupons will be utilized,and the goods purchased with the coupons would normally sell for $350.
Required:
(a)How many performance obligations are in a contract to purchase a computer workstation? Explain the reasons for your answer.
(b)Prepare a journal entry to record revenue for the sale of 120 computer workstations,assuming that DGA uses the residual method to estimate the stand-alone selling price of the workstations sold without the discount coupon.

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Definitions:

Buildings

Physical structures owned or used by a business for its operations, considered as a fixed asset on the balance sheet.

Machinery and Equipment

Long-term assets used in the operation of a business, typically for manufacturing, processing, or office operations.

Land

A natural resource that refers to the earth's surface not covered by water, which can be used for agriculture, construction, or as an investment.

Insurance

A financial product that provides protection against losses or damages, typically in the form of a policy for which the insured pays a premium.