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Prepare the journal entries that relate to the sale

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Reference no: EM133067749

Question - Warm & Cool Co. (WC) is a large public Canadian company that provides industrial air conditioning and heating products to small businesses across Ontario. The Company has a year-end of December 31.

The company is known for offering a suite of products and services of which include:

-Industrial heaters ($1,600)

-Portable cooling stations ($1,200)

-Installation services ($1,000)

-Site inspections ($800)

They are most known for the "Canadian Winter Package" which includes an industrial heater and installation services for $2,200. The company is known for their superior customer service and offers an optional and separate warranty for $500 over 2 years that covers all issues with the industrial heater from the point of delivery. All customers pay once they place an order.

To obtain new customers over the winter, the Company is offering a 10% discount on the Canadian Winter Package for those that make a purchase between August 1, 2021, and October 1, 2021.

The Company sold one Canadian Winter Package with warranty on September 1, 2021. The delivery of the industrial heater took place in December 2021, however due to a backlog of other orders, the installation did not take place until January 2022.

Required -

A) Analyze, with support, how WC should account for the above revenue transactions. Be specific. Be specific and make any necessary assumptions (revenue recognition model)

B) Prepare the journal entries that relate to the sale of the Canadian Winter Package and warranty until year-end.

Reference no: EM133067749

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