50.1K

Verified Solution

Link Copied!

Sunland Company manufactures products ranging from simple automated machinery to complex systems containing numerous: components, Unit selting prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Sunland has the following arrangement with Novak Inc. - Novak purchases equipment from Sunland for a price of $1,007,000 and contracts with Sunland to install the equipment. Sunland charges the same price for the equipment irrespective of whether it does the installation or not. Using market data. Sunland determines installation service is estimated to have a standalone selling price of $53,000. The cost of the equipment is $630,000. - Novak is obligated to pay Sunland the $1,007,000 upon the delivery of the equipment. Sunland delivers the equipment on June 1,2025, and completes the installation of the equipment on September 30, 2025. The equipment has a useful life of 10 years. Assume that the equipment and the installation are two distinct performance obligations which should be accounted for separately. Prepare the journal entries for Sunland for this revenue arrangement on June 1,2025 and September 30, 2025, assuming Sunland recelves payment when the equiptment is defivered. fCredit aceount 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 o-for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem. Round onswers to 0 decimal places, e.8. 5,275.)

Answer & Explanation Solved by verified expert

See Answer