On April 7, 2017, McCool Systems signed a contract to develop and install a virtual private network (VPN) for Billy Majors Stores. The transaction price, including installation, is $ 580,000. The VPN consists of four components: regional offices, corporate, retail stores, and remote users ( for example, buyers). Each component is fully functional at the point of delivery. The four components of the total network are each correctly classified as a performance obligation and each have standalone fair values as follows:
VPN Component Standalone Sales Value
Regional office…………………….$ 130,000
Corporate………………………….. 270,000
Retail stores……………………….. 150,000
Remote users……………………….. 50,000
Total $ 600,000
McCool collects the contract price in advance. McCool completed the regional office and remote user components on December 31, 2017. Prepare the journal entry to record the contract and to record any revenue to be recognized during the current period. Show all supporting computations.