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Ayayai Cellular 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. Tablet Bundle A sells a tablet with 4 years of Internet service. The price for the tablet and a 4-year Internet connection service contract is $1,080. The standalone selling price of the tablet is $540 (the cost to Ayayai Cellular is $220). Ayayai Cellular sells the Internet access service independently for an upfront payment of $756. On January 2, 2020, Ayayai Cellular signed 100 contracts, receiving a total of $108,000 in cash. 2. Tablet 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 4-year contract period. That product bundle sells for $1,350. Ayayai Cellular provides the 4-year tablet service plan as a separate product with a standalone selling price of $360. Ayayai Cellular signed 440 contracts for Tablet Bundle B on July 1, 2020, receiving a total of $594,000 in cash. In response to competitive pressure for Internet access for Tablet Bundle A, after 2 years of the 4-year contract, Ayayai Cellular offers a modified contract and extension incentive. The extended contract services are similar to those provided in the first 2 years of the contract. Signing the extension and paying $216 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. 40 Tablet Bundle A customers sign up for this offer.

Ayayai Cellular 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. Tablet Bundle A sells a tablet with 4 years of Internet service. The price for the tablet and a 4-year Internet connection service contract is $1,080. The standalone selling price of the tablet is $540 (the cost to Ayayai Cellular is $220). Ayayai Cellular sells the Internet access service independently for an upfront payment of $756. On January 2, 2020, Ayayai Cellular signed 100 contracts, receiving a total of $108,000 in cash. 2. Tablet 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 4-year contract period. That product bundle sells for $1,350. Ayayai Cellular provides the 4-year tablet service plan as a separate product with a standalone selling price of $360. Ayayai Cellular signed 440 contracts for Tablet Bundle B on July 1, 2020, receiving a total of $594,000 in cash. In response to competitive pressure for Internet access for Tablet Bundle A, after 2 years of the 4-year contract, Ayayai Cellular offers a modified contract and extension incentive. The extended contract services are similar to those provided in the first 2 years of the contract. Signing the extension and paying $216 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. 40 Tablet Bundle A customers sign up for this offer.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
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Prepare the journal entry when the contract is signed on January 2, 2022, for the 40 extended contracts. Assume the modification does not result in a separate performance obligation. (Credit account titles are automatically indented when the amount is entered. Do not Indent manually. If no entry Is requlred, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Prepare the journal entry on December 31, 2022, for the 40 extended contracts (the first year of the revised 4-year contract). (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 O for the amounts.) Debit Credit Account Titles and Explanation eTextbook and Media List of Accounts
Transcribed Image Text:Prepare the journal entry when the contract is signed on January 2, 2022, for the 40 extended contracts. Assume the modification does not result in a separate performance obligation. (Credit account titles are automatically indented when the amount is entered. Do not Indent manually. If no entry Is requlred, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Prepare the journal entry on December 31, 2022, for the 40 extended contracts (the first year of the revised 4-year contract). (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 O for the amounts.) Debit Credit Account Titles and Explanation eTextbook and Media List of Accounts
Ayayai Cellular sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set upa Wi-Fi hot spot. It offers two bundles with the following terms: Tablet Bundle A sells a tablet with 4 years of Internet service. The price for the tablet and a 4-year Internet connection service contract is $1,080. The standalone selling price of the tablet is $540 (the cost to Ayayai Cellular is $220). Ayayai Cellular sells the Internet access service independently for an upfront payment of $756. On January 2, 2020, Ayayai Cellular signed 100 contracts, receiving a total of $108,000 in cash. 1. Tablet 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 4-year contract period. That product bundle sells for $1,350. Ayayai Cellular provides the 4-year tablet service plan as a separate product with a standalone selling price of $360. Ayayai Cellular signed 440 contracts for Tablet Bundle B on July 1, 2020, receiving a total of $594,000 in cash. 2. In response to competitive pressure for Internet access for Tablet Bundle A, after 2 years of the 4-year contract, Ayayai Cellular offers a modified contract and extension incentive. The extended contract services are similar to those provided in the first 2 years of the contract. Signing the extension and paying $216 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. 40 Tablet Bundle A customers sign up for this offer.
Transcribed Image Text:Ayayai Cellular sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set upa Wi-Fi hot spot. It offers two bundles with the following terms: Tablet Bundle A sells a tablet with 4 years of Internet service. The price for the tablet and a 4-year Internet connection service contract is $1,080. The standalone selling price of the tablet is $540 (the cost to Ayayai Cellular is $220). Ayayai Cellular sells the Internet access service independently for an upfront payment of $756. On January 2, 2020, Ayayai Cellular signed 100 contracts, receiving a total of $108,000 in cash. 1. Tablet 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 4-year contract period. That product bundle sells for $1,350. Ayayai Cellular provides the 4-year tablet service plan as a separate product with a standalone selling price of $360. Ayayai Cellular signed 440 contracts for Tablet Bundle B on July 1, 2020, receiving a total of $594,000 in cash. 2. In response to competitive pressure for Internet access for Tablet Bundle A, after 2 years of the 4-year contract, Ayayai Cellular offers a modified contract and extension incentive. The extended contract services are similar to those provided in the first 2 years of the contract. Signing the extension and paying $216 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. 40 Tablet Bundle A customers sign up for this offer.
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