Sea Water Spas provides a custom sales package to customers. Sea Water sold a custom package including 50 Hot Tubs and service maintenance to the Marriott Hotel chain for their hotels. Sea Water received $115,000 in total for the custom package. Each Hot Tub sells for $2,000 and the maintenance package covers 3 years and sells for $500 if sold individually.

The cost of the Hot Tubs to Sea Water was $1,400.

Instructions

a) Calculate the sale price that should be allocated to each component of the bundle.

b) Prepare the journal entry to record the transaction.