BigBoy Equipment Inc. sells heavy-duty forklift trucks. Model 217A has a stand-alone price of $140,000. BigBoy offers to sell the 217A inclusive of a three-year service contract for $180,000.

Required:

Prepare a journal entry to record the sale of one Model 217A forklift truck plus service contract for $180,000 assuming:

1. A comparable service contract is sold separately for $60,000. BigBoy uses the relative stand-alone value method for multiple deliverables.

2. The service contract has a variable stand-alone value ranging from $35,000 to $60,000 and BigBoy uses the residual value method.