ACC 302 revenue recognition

I. Allocate Transaction Price, Upfront FeesTablet Tailors 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 3 years of Internet service. The price for the tablet and a 3-year Internet
connection service contract is $500. The standalone selling price of the tablet is $250 (the cost to Tablet Tailors is
$175). Tablet Tailors sells the Internet access service independently for an upfront payment of $300. On January
2, 2025, Tablet Tailors signed 100 contracts, receiving a total of $50,000 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 3-year contract period. That product bundle sells for
$600. Tablet Tailors provides the 3-year tablet service plan as a separate product with a standalone selling price of
$150. Tablet Tailors signed 200 contracts for Tablet Bundle B on July 1, 2025, receiving a total of $120,000 in
cash.
Instructions:
(a) Prepare any journal entries to record the revenue arrangement for Tablet Bundle A on January 2, 2025, and
December 31, 2025.
(b)Prepare any journal entries to record the revenue arrangement for Tablet Bundle B on July 1,2025, and
December31, 2025.
(c) Repeat the requirements for part (a), assuming that Tablet Tailors has no reliable data with which to estimate
the stand- alone selling price for the Internet service.
Note about journal entry format:
Enter debits first: If more than one debit, list in descending
order (highest amount first)
Enter credits second: If more than one credit, list in descending
order (highest amount first)
*Use the rounded whole numbers in your final calculations for
the journal entries.
*Points may be deducted for incorrect account names.
Debit
Jan. 2
Account Name
Account Name
Account Name
(To record revenue and unearned revenue for Jan. 2 revenue agreement.)
Jan. 2
Account Name
Account Name
(To record COGS )
Dec. 31
Unearned Service Revenue
Service Revenue
(To record revenue for internet service provided in 2025)
Jul. 1
Credit
Debit
Credit
Account Name
Account Name
Account Name
Account Name
(To record revenue and unearned revenue for Jul 1 revenue agreement.)
Jul. 1
Account Name
Account Name
(To record COGS )
Dec. 31
Account Name
Account Name
Account Name
(To record revenue for internet and maintenance services provided in 2025)
Debit
Jan. 2
Account Name
Account Name
Account Name
Jul. 1
Account Name
Account Name
Dec. 31
Account Name
Account Name
(To record revenue for internet service provided in 2025)
Credit
Standalone price per contract:
Standalone Price: Tablet
Standalone Price: Internet
Total standalone price
$
–
Enter cacluation into
Allocation per contract:
cells
Tablet
Internet
*Total
$
*Total should equal the sales revenue per contract.
Standalone price per contract:
Allocated to Tablet
Allocated to Internet Service
Allocated to Tablet Service
Plan
Total estimated standalone price
$
–
Enter cacluation into
Allocation per contract:
cells
Tablet
Internet
Tablet Service Plan
*Total
$
*Total should equal the sales revenue per contract.
Standalone price per contract:
Allocated to Tablet
Allocated to Internet Service
Total
$
–
Enter cacluation into
Allocation per contract:
cells
Tablet
Internet
*Total
$
*Total should equal the sales revenue per contract.
(round to the
nearest whole
dollar)
(round to the
nearest whole
dollar)
(round to the
nearest whole
dollar)
GRADING
Part (a)
Cell Ref Correct/Incorrect
Points awarded
0.0
O15
INCORRECT
0.0
O16
INCORRECT
0.0
G15
INCORRECT
0.0
H16
INCORRECT
0.0
H17
INCORRECT
0.0
G20
INCORRECT
0.0
H21
INCORRECT
0.0
G24
INCORRECT
0.0
H25
INCORRECT
0
Total for part (a)
GRADING
Part (b)
Cell Ref Correct/Incorrect
Points awarded
0.0
O32
INCORRECT
0.0
O33
INCORRECT
0.0
O34
INCORRECT
0.0
G31
INCORRECT
0.0
H32
INCORRECT
0.0
H33
INCORRECT
0.0
H34
INCORRECT
0.0
G37
INCORRECT
0.0
H38
INCORRECT
0.0
G41
INCORRECT
0.0
G43
INCORRECT
0.0
H43
INCORRECT
0
Total for part (b)
GRADING
Part (c)
Cell Ref Correct/Incorrect
Points awarded
0.0
O49
INCORRECT
0.0
O50
INCORRECT
0.0
G49
INCORRECT
0.0
H50
INCORRECT
0.0
H51
INCORRECT
0.0
G53
INCORRECT
0.0
H54
INCORRECT
0.0
G56
INCORRECT
0.0
H57
INCORRECT
0
Total for part (c)
TOTAL
0
Homework # 1
Part I
Allocate Transaction Price, Upfront Fees Tablet Tailors 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 3 years of Internet service. The price for the tablet and a 3year Internet connection service contract is $500. The standalone selling price of the tablet is
$250 (the cost to Tablet Tailors is $175). Tablet Tailors sells the Internet access service
independently for an upfront payment of $300. On January 2, 2025, Tablet Tailors signed 100
contracts, receiving a total of $50,000 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 3-year contract
period. That product bundle sells for $600. Tablet Tailors provides the 3-year tablet service plan
as a separate product with a standalone selling price of $150. Tablet Tailors signed 200 contracts
for Tablet Bundle B on July 1, 2025, receiving a total of $120,000 in cash.
Instructions:
(a) Prepare any journal entries to record the revenue arrangement for Tablet Bundle A on
January 2, 2025, and December 31, 2025.
(b)Prepare any journal entries to record the revenue arrangement for Tablet Bundle B on July
1,2025, and December 31, 2025.
(c) Repeat the requirements for part (a), assuming that Tablet Tailors has no reliable data with
which to estimate the stand- alone selling price for the Internet service.
Part II Five-Step Revenue Process
Revenue is recognized based on a five-step process that is applied to a company’s revenue
arrangements.
Instructions:
(a) Briefly describe the five-step process.
(b) Explain the importance of contracts when analyzing revenue arrangements.
(c) How are fair value measurement concepts applied in implementation of the fivestep
process?
(d) How does the five-step process reflect application of the definitions of assets and liabilities?
ADDITONAL INSTRUCTIONS:
❖ Complete Part I using the provided Excel template.
➢ Use cell references and cell formulas as applicable.
❖ Complete Part II using Word.
➢ Any references used must be cited in-text in APA format with the full reference listed on
a separate reference page.
❖ You must upload all your files at one time (you cannot upload one file and then come back
later and upload another.)