Sky Communcations (SKY) usually sells a cell phone for $282 plus 12 months of cellular service for $658. SKY has a special, time-limited offer in which it gives the phone for free and sells the 12 months of cellular service for $480. Each phone costs SKY $190, which it accounts for in its perpetual inventory system. On July 1, SKY sells one of the special packages, delivers the phone, collects the $480 cash, and starts the cellular service.

What journal entries would SKY record on July 1 and July 31?

1. Record reciept of cash.

2. Record the sales of cellular service for 12 months.

3. Record the cost of goods sold.

4. Record the deferred revenue.