Question

Complete Electronics Inc. sells a point-of-sale computer with a two-year service contract. Complete collects $ 2 comma 500 cash for the selling price of the computer and $ 576 for the two-year service contract. How is revenue​ recognized?

Answer 1

Sales revenue of $2,500 is recorded by Complete Electronic Inc. Upon delivery of the computer and a service revenue of $24 is recorded each month for 24 months

Step-by-step explanation:

Upon the sale of a point-of-sale computer:

Selling price of the computer = $2,500 cash

Two years service contract of the computer worth $576

A cash selling price of $2500 is recorded upon delivery of the point-of-sale computer.

The service contract worth $576 is pread over 24 months(2 years) = $576 / 24 = $24.

$24 service revenue is recorded each month for 24 months.