Question

Concord Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms. 1. Concord Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $534. The standalone selling price of the tablet is $264 (the cost to Concord Company is $184). Concord Company sells the Internet access service independently for an upfront payment of $319. On January 2, 2020, Concord Company signed 90 contracts, receiving a total of $48,060 in cash. 2. Concord Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $626. Concord Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $139. Concord Company signed 210 contracts for Concord Bundle B on July 1, 2020, receiving a total of $131,460 in cash. In response to competitive pressure for Internet access for Concord Bundle A, after 2 years of the 3-year contract, Concord Company offers a modified contract and extension incentive. The extended contract services are similar to those provided in the first 2 years of the contract. Signing the extension and paying $82 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. 50 Concord Bundle A customers sign up for this offer.

Prepare the journal entry when the contract is signed on January 2, 2022, for the 50 extended contracts. Assume the modification does not result in a separate performance obligation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Prepare the journal entry on December 31, 2022, for the 50 extended contracts (the first year of the revised 3-year contract). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.) Account Titles and Explanation Debit Credit

Answer 1

credit $4100 Answer: Journal Entry saite particulary Debit 2 Jan Cash (82x50) Aledr $4,100 To unearned service devenue Being to recold contract revenue at $82 for 50 contracts 31 Dee unearned service revenue Ale dr $2987 to service revenue Being to record service revenue) $2987 Working Noly - The allocation for Internet services - Particulars Amount service colt (A) $534 Fair value of tablet (6) $264 Fair value of Internet services (c) $319 Total fair value of Btc) Allocation for tablet (6/D XA} $ 242 Allocation for Internet service (C/DxA) $292 $ 583 Revenue to be recognised - particulars | Amount Existing internet service contract (A) [292x50 contracy $14,600 rennue recognized in post 2 years ) 19,733) (14,600x(2/3 years)] Remaining service contract ©) (A-B] 4867 Ellended service revenue 6) (82x50 contract] 44100 Total [e+D} Is 8,967 Revenue to be recognized 18967/3years] $2989