Kris Co. sells sophisticated computer hardware systems along with proprietary a

Question

Kris Co. sells sophisticated computer hardware systems along with proprietary a software license that is uniqu e to the hardware. The license provides a two-year subscription with renewal options available for a rchases of the hardware and software license in tandem. In addition, when purchased together, Kris Co. offers purchase discounts of 60% on its inte for $90,000. grative touchscreen technology. Kris Co. is currently offering this entire package to clients The price of the hardware is $75,000. The two-year license is $15,000, with renewals retailing fo $10,000. The integrative touchscreen retails for $1,000. The company anticipates that renew the software license and 85% will purchase the integrative touchscreen. 90% of clients will Provide the journal entry to recognize revenue if Kris Co. receives and provides orders for 400 customers during the month of January. Round calculations to the nearest hundredth of a percent and to the nearest dollar for easy of computation. 1. Provide a journal entry to recognize any adjustments Kris Co. would need to record at year-end if the touchscreen discount expires at the end of the year provided that 280 clients ordered the touchscreen. 2.

Explanation / Answer

Journal entry in the Books of Kris co.

Debit Credit

1. Bank/Cash account $ 36000000

to sales account $ 3600000

(being sales made to 400 customers during the month)

2. Sales account $168000

to Discount $ 168000

(Being 60% discount provided to 280 clients, now adjusted with sales as discount expires )

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