A company that usually sells a cell phone for $320 and 12 months of cellular service for $480 has a special, time-limited offer in which it gives the phone for free and sells the 12 months of cellular service for $420. On July 1, the company sells one of these packages, delivers the phone, collects the $420 cash, starts the cellular service, and properly records the transaction. Which of the following journal entries does the company need to record on July 31?

A)Debit Cash $35 and credit Service Revenue $35.

B)Debit Unearned Revenue $14 and credit Service Revenue $14.

C)Debit Unearned Revenue $21 and credit Service Revenue $21.

D) Debit Unearned Revenue $35 and credit Service Revenue $35.