Question

Ayayai 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. Ayayai 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 $520. The standalone selling price of the tablet is $238 (the cost to Ayayai Company is $170). Ayayai Company sells the Internet access service independently for an upfront payment of $328. On January 2, 2020, Ayayai Company signed 90 contracts, receiving a total of $46,800 in cash. Ayayai 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 $624. Ayayai Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $157. Ayayai Company signed 210 contracts for Ayayai Bundle B on July 1, 2020, receiving a total of $131,040 in cash. Prepare any journal entries to record the revenue arrangement for Ayayai 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 o for the amounts. Round answers to 0 decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold)

Answer 1

Requirement 1:

Date	Account title and Explanation	Debit	Credit
Jan 2,2020	Cash [90 x $520]	$46,800
	Sales revenue [90 x $219]		$19,710
	Unearned service revenue [90 x $301]		$27,090
	[To record sales]
	Cost of goods sold [90 x $170]	$15,300
	Inventory		$15,300
	[To record cost of goods sold]
Dec 31,2020	Unearned service revenue	$9,030
	Service revenue [27,090 x 1/3]		$9,030
	[To record revenue earned from Unearned revenue]

Calculations:

Standalone Selling price
Tablet	$238	42.05%
Internet service	$328	57.95%
Total	$566	100%
Actual Selling price
Tablet [$520 x 42.05%]		$219
Internet service [$520 x 57.95%]		$301
Total		$520

Requirement 2:

Date	Account title and Explanation	Debit	Credit
July 1, 2020	Cash [210 x $624]	$131,040
	Sales revenue [210 x $205]		$43,050
	Unearned service revenue-Internet [210 x $283]		$59,430
	Unearned service revenue-Tablet [210 x $136]		$28,560
	[To record sales]
	Cost of goods sold [210 x $170]	$35,700
	Inventory		$35,700
	[To record cost of goods sold]
Dec 31,2020	Unearned service revenue-Internet [59,430 x 6/36]	$9,905
	Unearned service revenue-Table [28,560 x 6/36]	$4,760
	Service Revenue		$14,665
	[To record revenue earned from Unearned revenue]

Calculations:

Standalone Selling price
Tablet	$238	32.92%
Internet service	$328	45.37%
Table service	$157	21.72%
Total	$723	100%
Actual Selling price
Tablet [$624 x 32.92%]		$205
Internet service [$624 x 45.37%]		$283
Table service [$624 x 21.72%]		$136
Total		$624

Requirement 3:

Date	Account title and Explanation	Debit	Credit
Jan 2,2020	Cash [90 x $520]	$46,800
	Sales revenue [90 x $238]		$21,420
	Unearned service revenue [90 x $282]		$25,380
	[To record sales]
	Cost of goods sold [90 x $170]	$15,300
	Inventory		$15,300
	[To record cost of goods sold]
Dec 31,2020	Unearned service revenue	$8,460
	Service revenue [25,380 x 1/3]		$8,460
	[To record revenue earned from Unearned revenue]

Calculations:

Total selling price of Bundle A	$520
Stand alone price of Tablet	($238)
Selling price of internet	$282