Question

View Policies Show Attempt History Current Attempt in Progress Crane 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. Crane 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 $494. The standalone selling price of the tablet is $225 (the cost to Crane Company is $176). Crane Company sells the Internet access service independently for an upfront payment of $321. On January 2, 2020, Crane Company signed 100 contracts, receiving a total of $49,400 in cash. Crane 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 $598. Crane Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $147. Crane Company signed 200 contracts for Crane Bundle B on July 1, 2020, receiving a total of $119,600 in cash. 2. اد)

Answer 1

Preparation of Journal Entries to record revenue arrangement for Crane Bundle : Date Account title and Explanation Debit Credit July 1,2020 Cash (200 x $598] $ 1,19,600 Sales revenue [200 x $194] $ 38,800 Unearned service revenue-Internet $ 55,400 Unearned service revenue-Tablet $ 25,400 [To record sales] $ 35,200 Cost of goods sold (200 x $176] Inventory [To record cost of goods sold] $ 35,200 9,233 4,233 Dec 31,2020 Unearned service revenue-Internet (55400 x 6/36] $ Unearned service revenue-Tablet [25400 x 6/36] $ Service revenue [To record revenue earned from Unearned revenue] $13,230 Working Notes: i.Selling prices: Standalone Selling Price Tablet Internet service Tablet service plan Total $ $ $ $ 225 321 147 693 32.47% 46.32% 21.21% 100.00% Actual Selling Price Tablet [598 x 32.47%] Internet service Tablet service plan Total 194 277 $ $ $ $ 127 598 * Kindly Comment down for any clarifications/ queries and please upvote.