Problem 18-1 Wildhorse 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. Wildhorse 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 $469. The standalone selling price of the tablet is $230 (the cost to Wildhorse Company is $157). Wildhorse Company sells the Internet access service independently for an upfront payment of $292. On January 2, 2017, Wildhorse Company signed 100 contracts, receiving a total of $46,900 in cash. Wildhorse 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 $574. Wildhorse Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $145. Wildhorse Company signed 220 contracts for Wildhorse Bundle B on July 1, 2017, receiving a total of $126,280 in cash. 2. Prepare any journal entries to record the revenue arrangement for Wildhorse 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 o for the amounts. Round answers to 0 decimal places, e.g. 5,125.) Account Titles and Explanation Debit Credit Cash Sales Revenue Unearned Service Revenue - Internet (To record sales) Cost of Goods Sold Inventory (To record cost of goods sold) Unearned Service Revenue - Internet Service Revenue Prepare any journal entries to record the revenue arrangement for Wildhorse 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 o for the amounts. Round answers to 0 decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit Jan. 2, 2017 Cash Unearned Service Revenue - Internet Unearned Service Revenue - Maintenance Sales Revenue (To record sales) Cost of Goods Sold Inventory (To record cost of goods sold) Dec. 31, 2017 Unearned Service Revenue - Internet Unearned Service Revenue - Maintenance Service Revenue Repeat the requirements for part (a), assuming that Wildhorse 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 o for the amounts. Round answers to o decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold) Click if you would like to Show Work for this question: Open Show Work Problem 18-1 Wildhorse 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. Wildhorse 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 $469. The standalone selling price of the tablet is $230 (the cost to Wildhorse Company is $157). Wildhorse Company sells the Internet access service independently for an upfront payment of $292. On January 2, 2017, Wildhorse Company signed 100 contracts, receiving a total of $46,900 in cash. Wildhorse 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 $574. Wildhorse Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $145. Wildhorse Company signed 220 contracts for Wildhorse Bundle B on July 1, 2017, receiving a total of $126,280 in cash. 2. Prepare any journal entries to record the revenue arrangement for Wildhorse 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 o for the amounts. Round answers to 0 decimal places, e.g. 5,125.) Account Titles and Explanation Debit Credit Cash Sales Revenue Unearned Service Revenue - Internet (To record sales) Cost of Goods Sold Inventory (To record cost of goods sold) Unearned Service Revenue - Internet Service Revenue Prepare any journal entries to record the revenue arrangement for Wildhorse 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 o for the amounts. Round answers to 0 decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit Jan. 2, 2017 Cash Unearned Service Revenue - Internet Unearned Service Revenue - Maintenance Sales Revenue (To record sales) Cost of Goods Sold Inventory (To record cost of goods sold) Dec. 31, 2017 Unearned Service Revenue - Internet Unearned Service Revenue - Maintenance Service Revenue Repeat the requirements for part (a), assuming that Wildhorse 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 o for the amounts. Round answers to o decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit (To record sales) (To record cost of goods sold) Click if you would like to Show Work for this question: Open Show Work
