1. Allocate Transaction Price, Upfront Fees

Tablet Tailors 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.

1. Tablet 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 $500. The standalone selling price of the tablet is $250 (the cost to Tablet Tailors is $175). Tablet Tailors sells the Internet access service independently for an upfront payment of $300. On January 2, 2020, Tablet Tailors signed

100 contracts, receiving a total of $50,000 in cash.

2. Tablet 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 $600. Tablet Tailors provides the 3-year tablet service plan as a separate product with a standalone selling price of

$150. Tablet Tailors signed 200 contracts for Tablet Bundle B on July 1, 2020, receiving a total of $120,000 in cash.

Instructions:

1. Prepare any journal entries to record the revenue arrangement for Tablet Bundle A on January 2, 2020, and December 31, 2020.
2. Prepare any journal entries to record the revenue arrangement for Tablet Bundle B on July 1,2020, and December31, 2020.
3. Repeat the requirements for part (a), assuming that Tablet Tailors has no reliable data with which to estimate the stand- alone selling price for the Internet service.

nearest wriole dollar) Jan. 2 Cash Debit Credit 50.000 Sales Revenue 22,727 Account Name 27,273 (To record revenue and unearned revenue for Jan. 2 revenue agreement.) Standalone price per contract: Standalone Price: Tablet $ 250 Standalone Price: Internet $ 300 Total standalone price $ 550 Ciel Caciului MLU Allocation per contract: cells Tablet $ 50,000 Internet *Total $ 50,000 *Total should equal the sales revenue per contract Jan. 2 17,500 Cost of Goods Sold Inventory (To record COGS GRADING Part (a) Cell Ref Correct/Incorrect Points awarded 015 INCORRECT 0.0 016 INCORRECT 0.0 G15 CORRECT 1.0 H16 INCORRECT 0.0 H17 INCORRECT 0.0 G20 CORRECT 2.5 H21 CORRECT 2.5 G24 INCORRECT 0.0 H25 INCORRECT 0.0 Total for part (a) 6 17,500 Dec. 31 9,091 Unearned Service Revenue Service Revenue (To record revenue for internet service provided in 2020) 9,091 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Jul. 1 Debit Credit Account Name 120,000 Account Name 42,857 Account Name 77.143 Account Name (To record revenue and unearned revenue for Jul 1 revenue agreement.) Standalone price per contract: Allocated to Tablet Allocated to Internet Allocated to Tablet Service Total estimated standalone $ (round to the Enter cacluation into nearest whole Allocation per contract: cells dollar) Tablet Internet Tablet Service Plan *Total $ *Total should equal the sales revenue per contract. GRADING Part (b) Cell Ref Correct/Incorrect Points awarded 032 INCORRECT 0.0 033 INCORRECT 0.0 034 INCORRECT 0.0 G31 CORRECT 1.0 H32 INCORRECT 0.0 H33 INCORRECT 0.0 H34 INCORRECT 0.0 Jul. 1 35,000 Account Name Account Name (To record COGS) 35,000 Jul. 1 29 30 31 32 33 34 35 36 37 Debit Credit Account Name 120,000 Account Name 42,857 Account Name 77,143 Account Name (To record revenue and unearned revenue for Jul 1 revenue agreement.) Standalone price per contract: Allocated to Tablet Allocated to Internet Allocated to Tablet Service Total estimated standalone $ (round to the Enter cacluation into nearest whole Allocation per contract: cells dollar) Tablet Internet Tablet Service Plan *Total $ *Total should equal the sales revenue per contract. Jul. 1 35,000 Account Name Account Name (To record COGS ) 35,000 GRADING Part (b) Cell Ref Correct/Incorrect Points awarded 032 INCORRECT 0.0 033 INCORRECT 0.0 034 INCORRECT 0.0 G31 CORRECT 1.0 H32 INCORRECT 0.0 H33 INCORRECT 0.0 H34 INCORRECT G37 CORRECT 2.5 H38 CORRECT 2.5 G41 INCORRECT 0.0 G43 INCORRECT 0.0 H43 INCORRECT 0.0 Total for part (b) 6 6 0.0 38 39 40 41 42 43 44 45 46 Dec. 31 Account Name 25,714 Account Name 25.714 Account Name (To record revenue for internet and maintenance services provided in 2020) 47 (round to the nearest whole dollar) Debit Credit 48 49 Jan. 2 Cash Standalone price per contract: Allocated to Tablet Allocated to Internet Total $ Unearned Service Revenue (Internet) Unearned Service Revenue (Tablet) Enter cacluation into Allocation per contract: cells Tablet Internet *Total $ *Total should equal the sales revenue per contract. Jul. 1 COGS Inventory 50 51 52 53 54 55 56 57 58 59 60 64 GRADING Part (c) Cell Ref Correct/Incorrect Points awarded 049 INCORRECT 0.0 050 INCORRECT 0.0 G49 INCORRECT 0.0 H50 INCORRECT 0.0 H51 INCORRECT 0.0 G53 INCORRECT 0.0 H54 INCORRECT 0.0 G56 INCORRECT 0.0 H57 INCORRECT 0.0 Total for part (0) 0 Dec. 31 Unearned Service Revenue (Internet) Service Revenue (To record revenue for internet service provided in 2020)