Question

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. (a) Prepare any journal entries to record the revenue arrangement for Crane Bundle A on January 2, 2020, and December 31, 2020. (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 for the amounts. Round answers to O decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Cred (To record sales)

Answer 1

Answer
Date	Account Titles and Explanation	Debit	Credit
Jan2,2020	Cash	$     49,400
	Sales revenue		$       20,357	49400/(225+321)*225
	Unearned Service revenue		$       29,043	49400/(225+321)*321
	Cost of goods sold	$     17,600		176*100
	Inventory		$       17,600
Dec-31-20	Unearned Service revenue	$       9,681		29043/3
	Service revenue		$         9,681