Question

Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation and training are $90,000, $60,000 and $30,000 respectively.

The journal entry to record the transaction on March 15, 2021 will include a :

A. credit to Unearned Service Revenue of $24,000
B. debit to Unearned Service Revenue of $30,000
C. credit to Sales Revenue for $144,000
D. credit to Service Revenue of $60,000.

Answer 1

A. credit to Unearned Service Revenue of $24,000

Step-by-step explanation:

Total cost = $90,000 + $60,000 + $30,000 = $180,000

Unearned service training service revenue = ($30,000 ÷ $180,000) × $144,000 = $24,000

Therefore, the correction option is A. credit to Unearned Service Revenue of $24,000.