Waterway Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms.

1.		Waterway Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $485. The standalone selling price of the tablet is $256 (the cost to Waterway Company is $165). Waterway Company sells the Internet access service independently for an upfront payment of $280. On January 2, 2017, Waterway Company signed 100 contracts, receiving a total of $48,500 in cash.
2.		Waterway Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $578. Waterway Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $155. Waterway Company signed 200 contracts for Waterway Bundle B on July 1, 2017, receiving a total of $115,600 in cash.

Problem 18-1

Prepare any journal entries to record the revenue arrangement for Waterway Bundle A on January 2, 2017, and December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.)

Date	Account Titles and Explanation	Debit	Credit

(To record sales)

(To record cost of goods sold)

Show List of Accounts

Link to Text

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Prepare any journal entries to record the revenue arrangement for Waterway Bundle B on July 1, 2017, and December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.)

Date	Account Titles and Explanation	Debit	Credit

	(To record sales)
	(To record cost of goods sold)
Dec. 31, 2017

Show List of Accounts

Link to Text

Link to Text

Repeat the requirements for part (a), assuming that Waterway Company has no reliable data with which to estimate the standalone selling price for the Internet service. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,125.)

Date	Account Titles and Explanation	Debit	Credit

(To record sales)

(To record cost of goods sold)