Beff Ltd. sells accounting software for a price of $20,000.To make the sale more attractive, Beff Ltd. offers to sell the software inclusive of a three-year service contract for $27,000.A comparable service contract is sold separately for $12,000.

A customer approached Beff Ltd. with respect to the sale.A contract was signed on January 1,20x4 and the customer paid Beff Ltd. cash.

Required:

1. Assess the five steps for revenue recognition and determine when the performance obligation iscomplete
2. Provide journal entry or entries to record the sale of the software and service contract on January 1, 20x4 and any adjusting entry on December 31, 20x4 (i.e. the company's fiscal year end).