Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2017, a customer purchased a dishwasher that Rix normally sells for $ 1,000. In addition, the customer purchased the installation service and a 3 year service contract, with stand alone selling prices of $ 200 and $ 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer $ 1,400.
Required:
1. How should the transaction price be allocated among the products?
2. Prepare the journal entries to recognize revenue related to each product in 2017.