Make any journal entries to record revenue arrangement

Assignment Help Accounting Basics

Reference no: EM131914946

Problem

Monty 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. Monty 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 $464. The standalone selling price of the tablet is $229 (the cost to Monty Company is $172). Monty Company sells the Internet access service independently for an upfront payment of $290. On January 2, 2017, Monty Company signed 100 contracts, receiving a total of $46,400 in cash.

2. Monty 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 $563. Monty Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $154. Monty Company signed 190 contracts for Monty Bundle B on July 1, 2017, receiving a total of $106,970 in cash.

Prepare any journal entries to record the revenue arrangement for Monty Bundle A on January 2, 2017, and December 31, 2017.

Reference no: EM131914946

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