Question
Canucks Inc., a software company sells new accounting software and user support bundled together. The fair value of its software is $1,500 and the fair
Canucks Inc., a software company sells new accounting software and user support bundled together. The fair value of its software is $1,500 and the fair value of the associated user support is $500. The user support is valid for a period of 12 months from the date of software purchase. To be able to compete with a new competitor, Canucks decided to sell its software and service as a bundle at a discount for $1,800.
On June 1, Loon Inc., agreed to purchase 10 units of this software bundle. Loon downloaded the software on the same day and paid the balance in full. Canucks prepare adjusting entries to recognize revenues and expenses at the end of each month.
Prepare journal entries for Canucks on June 1 and June 30.
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