Problem 18-1

Ivanhoe Company 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. It offers two bundles with the following terms.

1.		Ivanhoe 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 $494. The standalone selling price of the tablet is $225 (the cost to Ivanhoe Company is $176). Ivanhoe Company sells the Internet access service independently for an upfront payment of $321. On January 2, 2017, Ivanhoe Company signed 100 contracts, receiving a total of $49,400 in cash.
2.		Ivanhoe Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $598. Ivanhoe Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $147. Ivanhoe Company signed 200 contracts for Ivanhoe Bundle B on July 1, 2017, receiving a total of $119,600 in cash.

Prepare any journal entries to record the revenue arrangement for Ivanhoe Bundle A on January 2, 2017, and December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.)

Prepare any journal entries to record the revenue arrangement for Ivanhoe Bundle B on July 1, 2017, and December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.)

Repeat the requirements for part (a), assuming that Ivanhoe Company has no reliable data with which to estimate the standalone selling price for the Internet service. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.)

Date Account Titles and Explanation (To record sales o record cost of goods sold Debit Credit