Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for $1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of $200 and $400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer $1,400.

Required:

a.	How should the transaction price be allocated among the products?
b	Prepare the journal entries to recognize revenue related to each product in 2019.

a. How should the transaction price be allocated among the products?

Dishwasher
Installation
Service contract

b.Prepare the journal entry to recognize revenue related to each product sold on April 1 and the end of year entry on December 31.

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT