1. Sweet 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. Sweet 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 $516. The standalone selling price of the tablet is $267 (the cost to Sweet Company is $175). Sweet Company sells the Internet access service independently for an upfront payment of $299. On January 2, 2020, Sweet Company signed 110 contracts, receiving a total of $56,760 in cash. Sweet 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 $619. Sweet Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $164. Sweet Company signed 210 contracts for Sweet Bundle B on July 1, 2020, receiving a total of $129,990 in cash. 2. Prepare any journal entries to record the revenue arrangement for Sweet 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 o decimal places, e.g. 5,125.) Date Debit Credit Jan. 2, 2020 26775 Account Titles and Explanation Cash 56760 Sales Revenue Unearned Service Revenue (To record sales) Cost of Goods Sold 19250 29985 Inventory 19250 (To record cost of goods sold) ) Dec. 31, 2020 Unearned Service Revenue 9995 Service Revenue 9995 Prepare any journal entries to record the revenue arrangement for Sweet Bundle B on July 1, 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 Cash Sales Revenue Unearned Service Revenue (To record sales) (To record cost of goods sold) ---LI. dub. ILL...LIL ----------- ---L-- AL- Repeat the requirements for part (a), assuming that Sweet company has no reliable data with which to estimate the standalone selling price for the Internet service. (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)
