PB6-4 Recording Journal Entry after Allocating Transaction Price to Performance Obligations [LO 6-5]

[The following information applies to the questions displayed below.]

Sky Communcations (SKY) usually sells a cell phone for $320 plus 12 months of cellular service for $480. SKY has a special, time-limited offer in which it gives the phone for free and sells the 12 months of cellular service for $420. Each phone costs SKY $120, which it accounts for in its perpetual inventory system. On July 1, SKY sells one of the special packages, delivers the phone, collects the $420 cash, and starts the cellular service.

Record Journal entry for the following

A)Record the receipt of cash

B)Record the sales of cellular service for 12 months.

C)Record the cost of goods sold.

D)Record the deferred revenue.