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BoTeck is a full-service technology company. It provides equipment, installation services, and training services. Customers can...

BoTeck is a full-service technology company. It provides equipment, installation services, and training services. Customers can purchase any product or service separately or as a bundled package. On May 3, Box-Rite Corporation purchased computer equipment, installation, and training for a total cost of $120,000. Estimated stand-alone fair values of the equipment, installation, and training are $75,000, $50,000, and $25,000 respectively. The journal entry to record the sale and installation on May 3 will include a. credit to Unearned Service Revenue of $20,000. b. credit to Sales Revenue for $120,000. c. credit to Service Revenue of $50,000. d. debit to Unearned Service Revenue of $25,000.

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Answer #1
Stand-alone fair values :
Equipment 75000
Installation 50000
Training 25000
Total 150000
Allocated to:
Equipment 60000 =120000*75000/150000
Installation 40000 =120000*50000/150000
Training 20000 =120000*25000/150000
Total 120000
The journal entry to record the sale and installation on May 3 is:
Debit Credit
Cash 120000
     Sales revenue 60000
     Service Revenue 40000
     Unearned Service Revenue 20000
credit to Unearned Service Revenue of $20,000.
Option A is correct
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