Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT L

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Account Titles and Explanation

Debit

Credit

SHOW LIST OF ACCOUNTS

LINK TO TEXT

LINK TO TEXT

LINK TO TEXT

Account Titles and Explanation

Debit

Credit

amarisk 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. Tamarisk 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 $494. The standalone selling price of the tablet is $225 (the cost to Tamarisk Company is $176). Tamarisk Company sells the Internet access service independently for an upfront payment of $321. On January 2, 2017, Tamarisk Company signed 100 contracts, receiving a total of $49,400 in cash. 2. Tamarisk 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 $598. Tamarisk Company provides the 3-year tablet service plan as a separate product with a standalone selling price of $147. Tamarisk Company signed 200 contracts for Tamarisk Bundle B on July 1, 2017, receiving a total of $119,600 in cash.
In response to competitive pressure for Internet access for Tamarisk Bundle A, after 2 years of the 3-year contract, Tamarisk Company 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 $94 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. 30 Tamarisk Bundle A customers sign up for this offer.

Explanation / Answer

Working:

Date Account title Debit Credit Jan.1,2019 Cash 2820 Unearned Service Revenue 2820 (Cash received for the extended service for two more years from the end of the first contract)

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