exhibit 5

7. Refer to Exhibit 5 which illustrates the "regular sale of an iPhone (i.e. purchases outside the Upgrade Program) under the new 2009 rule". Describe and justify the journal entries of sale of a phone. Make sure you label each account correctly (e.g. cash(+A)) and check balance sheet will remain balanced after these journal entries. How does Total Assets, Total Liabilities, and Net Income immediately change after each sale? Exhibit 5 Illustration of the iPhone Accounting under the 2009 Rule" (s) Assume that Apple sold the iPhone 6s for $619 (without AppleCare+) and that Apple allocated $10 of revenue to the software deliverable. The software deliverable is excluded from the illustration below, reducing the revenue for the iPhone 6s to $639. After excluding the software deliverable, assume that the gross profit was $192 (30%). The accounting for the iPhone sale under the "2009 rule" would be as follows: Q1 (iPhone was sold to consumer): Dr. Cash 639 Cr. Revenue 639 Dr. Cost of Goods Sold 447 Cr. Inventory I 447 Source: Casewriter Note: "Dr" na "debit" and "Cr" means "credit