P18.1 (LO2, 3) (Allocate Transaction Price, Upfront Fees)Tablet Tailors 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. Itoffers two bundles with the

following terms.

1.Tablet 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 500. The

standalone selling price of the tablet is 250 (the cost to Tablet Tailors is

175). Tablet Tailors sells the Internet access service independently for an

upfront payment of 300. On January 2, 2019, Tablet Tailors signed 100

contracts, receiving a total of 50,000 in cash

2.Tablet Bundle B includes the tablet and Internet service plus a service plan

for the tablet PC (for any repairs or upgrades to thetablet or the Internet

connections) during the 3-year contract period. That product bundle sells for

600. Tablet Tailors provides the 3-year tablet serviceplan as a separate

product with a standalone selling price of 150. TabletTailors signed 200

contracts for Tablet Bundle B on July 1, 2019, receiving a total of 120,000

in cash.

Instructions

a. journal entries to record the revenue arrangement for Tablet

Bundle A on January 2, 2019, and December 31, 2019.

b. journal entries to record the revenue arrangement for Tablet

Bundle B on July 1, 2019, and December 31, 2019.

c.Repeat the requirements for part (a), assuming that Tablet Tailors has no

reliable data with which to estimate the standalone selling price for the

Internet service.

P18.2 (LO2, 3, 4) (Allocate Transaction Price, Modification of Contract)Refer

to the Tablet Bundle A revenue arrangement in P18.1. In response to

competitive pressure for Internet access for Tablet BundleA, after 2 years of the

3-year contract, Tablet Tailors offers a modified contract and extension incentive.

The extended contract services are similar to those provided in the first 2 years

of the contract. Signing the extension and paying 90 (which equals the

standalone selling of the revised Internet service package) extends access for 2

more years of Internet connection. Forty Tablet BundleA customers sign up for

this offer.

Instructions

a. journal entries when the contract is signedon January 2, 2021,

for the 40 extended contracts. Assume the modification does not result in a

separate performance obligation.

b.journal entries on December 31, 2021, for the 40 extended

contracts (the first year of the revised 3-year contract).