Problem 18-2, p. 1042
P18-2 (LO2,3,4) (Allocate Transaction Price, Modification of Contract) Refer to the Tablet Bundle A revenue arrangement in P18-1 (See below). In response to competitive pressure for Internet access for Tablet Bundle A, after 2 years of the 3-year contract, Tablet Tailors 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 $90 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. Forty Tablet Bundle A customers sign up for this offer.
Instructions
(a)Prepare the journal entries when the contract is signed on January 2, 2019, for the 40 extended contracts. Assume the modification does not result in a separate performance obligation.
(b)Prepare the journal entries on December 31, 2019, for the 40 extended contracts (the first year of the revised 3-year contract).
Reference Problem:
P18-1 (LO2,3) (Allocate Transaction Price, Upfront Fees) Tablet Tailors 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.Tablet 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 $500. The standalone selling price of the tablet is $250 (the cost to Tablet Tailors is $175). Tablet Tailors sells the Internet access service independently for an upfront payment of $300. On January 2, 2017, Tablet Tailors signed 100 contracts, receiving a total of $50,000 in cash
a.
Date | Particulars | Debit | Credit |
2-Jan-19 | Cash | 3600 | |
Uneraned Service Revenue | 3600 |
Explanation: 3600 = 40*90
Please note that services in the extended period are the same as the services that were provided in the original contract period. As they are not distinct hence the modifications will be considered as part of the original contract.
b.
Date | Particulars | Debit | Credit |
31-Dec-19 | Uneraned Service Revenue | 2413 | |
Service revenue | 2413 |
Explanation: Original internet service contract = 40*273 = 10,290
Revenue recognized in 1st two years = 10290*2/3 = 7280
Remianining service at orignal rates = 10290-7280 = 3640
Extended service = 3600
3640+3600 = $7240
7240/3 = $2413
Problem 18-2, p. 1042 P18-2 (LO2,3,4) (Allocate Transaction Price, Modification of Contract) Refer to the Tablet...
Problem 18-02
Teal 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.
Problem 18-02 Teal 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. Teal Bundle A sells a tablet with...
Marin 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. 2. Marin 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 $506. The standalone selling price of the tablet is $234 (the cost to Marin Company is $167). Marin Company...
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...
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...
Flint 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. Flint 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 $512. The standalone selling price of the tablet is $246 (the cost to Flint Company is $174). Flint Company sells...
Flint 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. Flint 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 $512. The standalone selling price of the tablet is $246 (the cost to Flint Company is $174). Flint Company sells...
Kingbird 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.
Kingbird 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 $488. The standalone selling price of the
tablet is $252 (the cost to Kingbird Company is $178). Kingbird
Company sells...
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...
Problem 18-01 (Part Level Submission) Grouper 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. Grouper 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 $491. The standalone selling price of the tablet is $246 (the cost to Grouper Company...
Stellar 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.
Stellar 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 $455. The standalone selling price of the
tablet is $234 (the cost to Stellar Company is $171). Stellar
Company sells...