Question

On March 1, year 1, Aqua Gold receives $294,000 from a local bank and promises to...

On March 1, year 1, Aqua Gold receives $294,000 from a local bank and promises to deliver 100 units of certified 1-oz. gold bars on a future date. The contract states that ownership passes to the bank when Aqua Gold delivers the products to Triniti’s, a third-party carrier. In addition, Aqua Gold has agreed to provide a replacement shipment at no additional cost if the product is lost in transit. The stand-alone price of a gold bar is $2,880 per unit, and Aqua Gold estimates the stand-alone price of the replacement insurance service to be $120 per unit. Triniti’s picked up the gold bars from Aqua Gold on March 30, and delivery to the bank occurred on April 1.

Required:

  1. How many performance obligations are in this contract?
  2. Prepare the journal entry Aqua Gold would record on March 1.
  3. Prepare the journal entry Aqua Gold would record on March 30.
  4. Prepare the journal entry Aqua Gold would record on April 1.
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