Tolan Corp. sells air conditioners. Pricing and cost information on air conditioner are as follows:

Item	Unit Standalone Selling Price	Unit Cost
Air conditioner	$3,800	$2,900

Tolan Corp. sells 5 air conditioners to Ace company at a total contract price of $18,000. The contract price also includes a 2-year maintenance plan starting from the appliance delivery date. The maintenance service is determined to have a fair value of $1,000. Ace company is obligated to pay Tolan Corp. the $18,000 upon the delivery of the appliance. Tolan Corp. signs the contract on July 1, 2020. The air conditioners are delivered on October 1, 2020, and the contract price is paid to Tolan Corp. on the same date. The 2-year maintenance plan starts from October 1, 2020.

(Note: you may not use all rows/columns of the provided tables)

(1) What are the 2 different performance obligations in this revenue arrangement: (3 points)

The 1^st performance obligation is: .

The 2^nd performance obligation is: .

(2) How should the transaction price of $18,000 be allocated between the 2 performance obligations? Show your computations in the table below: (3 points)

(3) Prepare all necessary journal entries for Tolan Corp. on October 1, 2020 upon delivery of the equipment and the receipt of the contract price. (8 points)

	Dr.	Cr.

(4) Prepare the adjusting journal entry for Tolan Corp. on December 31, 2020. (4 points)