Master grill sells free-standing gas grills plus

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Master Grill sells free-standing gas grills plus installation to a customer's gas line for a total price of $700. The contract price includes a one-year warranty on the product. On a standalone basis, the grill sells for $600 and Master Grill estimates the fair value of the installation service and warranty to be $120 and $30 respectively. To encourage prompt payment, Master Grill offers its customers a cash discount with terms of 1/10, n/30.

Master Grill concludes that each contract includes three separate performance obligations (grill, installation, and warranty) and it uses the net method to account for cash discounts. (Round all calculations to the nearest dollar.)

A. Master Grill installs one grill at a customer's home on June 1, 2014. The customer has not paid yet. Prepare the journal entry made by Master Grill on June 1, 2014 to record revenue.

B. The customer pays in full on June 15, 2014 (15 days later). Record the journal entry made by Master Grill n this date:

Reference no: EM13588786

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