Requirement b:
Date | Account title and Explanation | Debit | Credit |
July 1,2020 | Cash [210 x $589] | $123,690 | |
Sales revenue [210 x $211] | $44,310 | ||
Unearned service revenue-Internet [210 x $249] | $52,290 | ||
Unearned service revenue-Tablet [210 x $129] | $27,090 | ||
[To record sales] | |||
Cost of goods sold [210 x $166] | $34,860 | ||
Inventory | $34,860 | ||
[To record cost of goods sold] | |||
Dec 31,2020 | Unearned service revenue-Internet [52,290 x 6/36] | $8,715 | |
Unearned service revenue-Tablet [27,090 x 6/36] | $4,515 | ||
Service revenue | $13,230 | ||
[To record revenue earned from Unearned revenue] |
Calculations:
i.Selling prices:
Standalone Selling Price | ||
Tablet | $246 | 35.76% |
Internet service | $291 | 42.30% |
Tablet service plan | $151 | 21.95% |
Total | $688 | 100% |
Actual Selling Price | |
Tablet [589 x 35.76%] | $211 |
Internet service [589 x 42.30%] | $249 |
Tablet service plan [589 x 21.95%] | $129 |
Total | $589 |
ii. For Dec 31:
Services contracted for 36 months (3 years).
So, Revenue should be recognized for 6 months [July 1,2020 to Dec. 31,2020]
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