Question: In addition to its physical therapy equipment products, DTS's management entered into a long-term agreement on September 1, 2019 to begin supplying its internally developed web-based commercial therapy tracking software, PROGRESS- TRACKER, along with maintenance support, to a regional chain of therapy centers. The details of the agreement called for DTS to be paid $3,600,000 up front for the software and 3 years of maintenance support (beginning on the agreement date). The therapy center chain could have bought just the software for $2,870,300 with no support, and they could have independently contracted for the maintenance support for $1,116,200 for the three-year period. DTS determines the sales price, and directs the customization of the software. The cost of the software sold to the therapy center chain was $2,160,000. DTS considers this software part of its normal operations, and has recorded this sale as a point-of-sale transaction.

Solving:

The total contract price will be the $3,600,000 which is the price agreed between DTS and regional therapy centres..

Total individual selling price = $2,870,300 + $1,116,200 = $3,986,500

Software portion in total contract price = $2,870,300 / $3,986,500 x $3,600,000 = $2,592,018

Maintenance portion in total contract price = $1,116,200 / $3,986,500 x $3,600,000 = $1,007,982

While the solving has been done, I have had trouble with recognizing the journal entries. What are the journal entries that will be involved with this contract since the purchase of the service sept 1, 2019 till dec 31, 2019 that will be recognized? can you please use ALL the accounts that will be involved. for example how do I recognize deferred revenue, (CIP or billings- if they are needed) or the cost of the service and the revenue etc. Thank you!