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.

QUESTION

For the special offer, how much of the $420 relates to the sale of the cell phone versus the sale of the cellular service?

EQUIPMENT _______

SERVICE _________