How many performance obligations are in the contract

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On May 1, 2021, Beta Computer, Inc., enters into a contract to sell 5,000 units of Comfort Office Keyboard to one of its clients, Ward, Inc., at a fixed price of $95,000, to be settled by a cash payment on May 1. Delivery is scheduled for June 1, 2021. As part of the contract, the seller offers a 25% discount coupon to Ward for any purchases in the next six months. The seller will continue to offer a 5% discount on all sales during the same time period, which will be available to all customers. Based on experience, Beta Computer estimates a 50% probability that Ward will redeem the 25% discount voucher, and that the coupon will be applied to $20,000 of purchases. The stand-alone selling price for the Comfort Office Keyboard is $19.60 per unit.

Required:

Problem 1. How many performance obligations are in this contract?

Problem 2. Prepare the journal entry that Beta would record on May 1, 2021.

Reference no: EM132833603

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