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vaieri [72.5K]
3 years ago
8

Seadrill Engineering licensed software to oil-drilling firms for 5 years. In addition to providing the software, the company als

o provides consulting services and support to ensure smooth operation of the software. The total transaction price is $420,000. Based on standalone values, the company estimates the consulting services and support have a value of $120,000 and the software license has a value of $300,000. Assuming the performance obligations are not interdependent, the journal entry to record the transaction includesa. a credit to sales revenue for $250,000 and a credit to unearned service revenue of $100,000.
b. a credit to service revenue of $100,000.
c. a credit to unearned service revenue of $100,000.
d. a credit to sales revenue of $350,000.
Business
1 answer:
8090 [49]3 years ago
5 0

Answer:

The answer is: I believe the question was not copied correctly since the numbers don't match.

The recorded transactions should be:

  • Dr Cash 420,000
  • Cr Sales Revenue of 300,000
  • Cr Unearned Service Revenue of 120,000

Cash account should be debited, since it's an asset. Sales revenue should be credited since it increases equity.Unearned revenue is a type of liability, so it should be credited.

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