Question
Carla Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot
Carla Company 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.
Carla 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 $494. The standalone selling price of the tablet is $225 (the cost to Carla Company is $176). Carla Company sells the Internet access service independently for an upfront payment of $321. On January 2, 2017, Carla Company signed 100 contracts, receiving a total of $49,400 in cash.
Carla 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 $598. Carla Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $147. Carla Company signed 200 contracts for Carla Bundle B on July 1, 2017, receiving a total of $119,600 in cash.
Prepare any journal entries to record the revenue arrangement for Carla Bundle A on January 2, 2017, and December 31, 2017.
Prepare any journal entries to record the revenue arrangement for Carla Bundle B on July 1, 2017, and December 31, 2017
Repeat the requirements for part (a), assuming that Carla Company has no reliable data with which to estimate the standalone selling price for the Internet service.
Prepare any journal entries to record the revenue arrangement for Carla Bundle A on January 2, 2017, and December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places eng. 5,125) Account Titles and Explanation Debit (To record sales) (To record cost of goods sold)Step by Step Solution
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