Prepare journal entries to record the sale of one model

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Cosmo sells fork lift trucks. Model A has a stand alone price of $140,000. Cosmo offers to sell model A inclusive of a 3 year service contract for $180,000.

Problem 1: Prepare journal entries to record the sale of one model A forklift truck plus service contract for $180,000 assuming a comparable service contract is sold separately for $60,000. Cosmo uses the relative stand alone value method for multiple deliverables.

Problem 2: Prepare a journal entry to record the sale of one model A forklift truck plus service contract for $180,000 assuming the service contract has a variable stand-alone value ranging from $35,000 to $60,000 and Cosmo uses the residual value method.

Reference no: EM132970397

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