Ringaling Ltd provides telephone services to its customers. After conducting credit checks, Ringaling Ltd enters into a signed, written contract on 1 March 2020 with Ms Chatty to supply a mobile handset and a prepaid sim card. If these items are sold separately, the handset would be sold for $200 and the prepaid sim card would provide access to $100 worth of phone calls. If the items are bundled together, they retail for $240. Ms Chattys contract bundles the mobile handset and prepaid sim card for consideration of $240.

The handset is physically provided to Ms Chatty on the date the contract is signed and it is unlocked. This means that the mobile handset can be used on any other network subject to the access requirement of other providers. However, the prepaid sim card can only be used on this particular handset. The prepaid sim card will remain active until either the $100 worth of calls are used or it is three months from the date that the contract is signed. By 31 March, 2020, Ms Chatty has used $40 worth of phone calls.

REQUIRED:

(a) Explain how Ringaling Ltd would account for the revenue associated with this transaction in accordance with the requirements of AASB 15 Revenue.

(b) Based on your answer to (a) above, prepare general journal entries in the books of Ringaling Ltd to record revenue, if any, at the date the contract is entered into on 1 March.