Question

s, beginning on a) Prepare journal entries for Campbell for 2017-related revenue (b) Prepare journal entries for Camp to the franchise rights, Campbell also provides 1 year of oper signing date. These services have a value of $3,600. (c) Repeat the requirements for part (a), as chise period to maintain the franchise value. entries for Campbell for 2017 related revenue for this franchise ghts, Campbell also provides 1 year of operational consulting and training services, begin throughout their cments for part (a), assuming that Campbell must provide services to Benjamin througho P18- frills PROBLEMS nternet service, whid P18-1 02,3) (Allocate Transaction Price, Upfront Fees) , (Allocate Transaction Price InfrontoosTablet Tailors sells tablet PCS Combined with Internet service not. It offers two bundles with the following ter permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hotspot ce for the tablet and a 3-year Internet connectin 1. Tablet Bundle A sells a tablet with 3 years of Internet service. The price for service contract is $500. The standalone selling price of the tablet is $250 (the cost to Tablet Tailors is $175). Tablet Tail sells the Internet access service independently for an upfront payment of $300. On January 2, 2017, Tablet Tailors sien 100 contracts, receiving a total of $50,000 in cash. 2. Tablet 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 $600. Tablet Tailors provides the 3-year tablet service plan as a separate product with a standalone selling price of $150. Tablet Tailors signed 200 contracts for Tablet Bundle B on July 1, 2017, receiving a total of $120,000 in cash. Instructions (a) Prepare any journal entries to record the revenue arrangement for Tablet Bundle A on January 2, 2017. and December 31, 2017 Prepare any journal entries to record the revenue arrangement for Tablet Bundle B on luly 1. 2017. and December 31, 2017 Pepeat the requirements for part (a), assuming that tablet Tailors has no reliable data with which to estimate the stand alone selling price for the Internet service.

Answer 1

Tablet Tailors
a)	Total Revenue Number of Contracts* Price=(100*$500)	50000
	Revenue allocation between two obligations on the basis of standalone selling price
		Tablet	Internet Service	Total
	Standalone Selling Price	$               250.00	$                300.00	$                       550.00
	Revenue allocation to tablet=($250)/$550)*$500	$               227.27
	Revenue allocation to Internet Service=($300/$550)*$500		$                272.73
Date	General,Journal	Debit	Credit
02-Jan-17	Cash	$         50,000.00
	To Unearned Service Revenue		$                27,273
	To Sales Revenue		$                22,727
	(Being amount of Sales revenue and Unearned service revenue)
	Cost of goods sold	17500
	To Inventory		17500
	(Being amount of cost of goods sold)
31-Dec-17	Unearned Revenue	$            9,090.91
	To service Revenue		$             9,090.91
	(Unearned Revenue being earned)
b)	Total Revenue Number of Contracts* Price=(200*$600)	120000
	Revenue allocation between three obligations on the basis of standalone selling price
		Tablet	Internet Service	Tablet Service Plan	Total
	Standalone Selling Price	$               250.00	$                300.00	$                       150.00	$ 700.00
	Revenue allocation to tablet=($250)/$700)*$600	$                     214
	Revenue allocation to Internet Service=($300/$700)*$600		$                      257
	Revenue allocation to Tablet Service Plan=($150/$700)*$600			$                             129
Date	General,Journal	Debit	Credit
01-Jul-17	Cash	$      1,20,000.00
	To Unearned Service Revenue(Internet)		$                51,429
	To Unearned Service Revenue(Maintenance)		$                25,714
	To Sales Revenue		$                42,857
	(Being amount of Sales revenue and Unearned service revenue)
	Cost of goods sold	35000
	To Inventory		35000
	(Being amount of cost of goods sold)
31-Dec-17	Unearned Revenue-Internet	$            8,571.43
	Unearned Revenue-Maintenance	$            4,285.71
	To service Revenue		$          12,857.14
	(Unearned Revenue being earned)
c)	Total Revenue Number of Contracts* Price=(100*$500)	50000
	Revenue allocation between two obligations when no reliable data,distributed equally.
		Tablet	Internet Service	Total
	Standalone Selling Price	$               250.00	$                250.00	$                       500.00
	Revenue allocation to tablet=($250)/$500)*$500	$                     250
	Revenue allocation to Internet Service=($300/$550)*$500		$                      250
Date	General,Journal	Debit	Credit
02-Jan-17	Cash	$         50,000.00
	To Unearned Service Revenue		$                25,000
	To Sales Revenue		$                25,000
	(Being amount of Sales revenue and Unearned service revenue)
	Cost of goods sold	$         17,500.00
	To Inventory		$          17,500.00
	(Being amount of cost of goods sold)
31-Dec-17	Unearned Revenue	$            8,333.33
	To service Revenue		$             8,333.33
	(Unearned Revenue being earned)