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Homework answers / question archive / iDevice Sellers sells iDevice (a smartphone) combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot, and a service plan

iDevice Sellers sells iDevice (a smartphone) combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot, and a service plan

Accounting

iDevice Sellers sells iDevice (a smartphone) combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot, and a service plan. It offers a single bundle with the following terms:

iDevice bundle sells an iDevice with 2-years of Internet service and a service plan for the iDevice (for any repairs or upgrades to the tablet or the internet service) during the 2-year contract period. The product bundle sells for $700. The standalone selling price of the iDevice is $380 (the cost to iDevice Sellers $240). iDevice Sellers sells the Internet service independently for an upfront payment of $270. Additionally, the stand-alone price of the service plan is $160. On March 1, 2020, iDevice Sellers signed 100 contracts, receiving a total of $70,000 in cash.

Prepare any journal entries to record the revenue arrangement for the iDevice bundle on March 1, 2020.

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Date Account title and Explanation Debit Credit
March 1,2020 Cash [100 x $700] $70000  
  Sales revenue idevice [100 x $328]   $32800
  Unearned service revenue-Internet [100 x $234]   $ 23400
  Unearned service revenue-service plan [100x $138]   $ 13800
  [To record sales]    
       
  Cost of goods sold [100x $240] $24000  
  Inventory   $24000
  [To record cost of goods sold]    
       
Dec 31,2020 Unearned service revenue-Internet [23400x 10/24] $9750  
  Unearned service revenue-Tablet [13800 x 10/24] $5750  
  Service revenue   $15500
  [To record revenue earned from Unearned revenue]

Services contracted for 24 months (2 years). and Revenue should be recognized for 10 month march 2020 to dec2020 so multiply with 10

.Selling prices:

Standalone Selling Price  
idevice [589 x 35.76%] $380 46.91%
Internet service [589 x 42.30%] $ 270 33.34%
service plan [589 x 21.95%] $160 19.75%
Total $810 100%
Actual Selling Price
idevice [700x 46.91%] $ 328
Internet service [700 x 33.34%] $234
service plan [700 x 19.75%] 138
Total $ 700

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