Question
3) They gave the customer a discount for purchasing an AC unit as well as a service plan for 2 years, so the total revenue
3) They gave the customer a discount for purchasing an AC unit as well as a service plan for 2 years, so the total revenue collected was only $50,000. The customer agreed to pay $48,000 for the AC unit and installation on January 1st. In addition, they agreed to pay $1,000 at the end of 2021 and $1,000 at the end of 2022 for the service plan maintenance.
| Initial | Stand-Alone | Allocated | |
| Consideration | Selling Price | Selling Price % | Transaction Price |
| AC unit and installation | 50,000 | 94.55% | 47,277 |
| Service plan ($1,440*2 years) | 2,880 | 5.45% | 2,723 |
| Total consideration | 52,880 | 100.00% | 50,000 |
The original entry recorded was:
Jan. 1 | Cash |
| 48,000 |
|
| Sales revenue |
|
| 48,000 |
Dec. 31 | Cash |
| 1,000 |
|
| Sales revenue |
|
| 1,000 |
FIRST, PROVIDE ME WITH THE ENTRY AS IT SHOULD HAVE CORRECTLY BEEN RECORDED
Jan. 1 | Cash |
| 48,000 |
|
| Sales revenue |
|
| 47,277 |
| Unearned revenue |
|
| 723 |
Dec. 31 | Cash |
| 1,000 |
|
| Sales revenue (2,723/2) |
|
| 1,362 |
| Unearned revenue |
| 362 |
|
SECOND, PROVIDE ME WITH THE ENTRY TO ADJUST THE APPICABLE ACCOUNTS.
Dec. 31 |
|
|
|
|
Adjusting entry |
|
|
|
|
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