Lets say we visit our favorite phone store and sign up for new cell service.

We sign up for and receive a new phone that would normally retail for $500 (cost to manufacture $380). We commit to a three year contract where we will have to pay back an amount that starts at $600 (to pay for the phone) but drops each month until it reaches zero at the end of 3 years (kind of like financing for the phone). We pay an activation fee of $35 along with the first month of service that will be $70 each month for the next 36 months. After one year of service, we will be eligible for $100 off the latest phone if we trade in the one year old phone for a new one. That rises to $200 after two years.

Show all journal entries needed to show revenue recognition.