Question

Sarjit Systems sold software to a customer for $293,000. As part of the contract, Sarjit promises to provide "free" technical support over the next six months. Sarjit sells the same software without technical support for $255,000 and a stand-alone six-month technical support contract for $45,000, so these products would sell for $300,000 if sold separately. Prepare Sarjit’s journal entry to record the sale of the software. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Debit Cash:293000

    Credit Sales revenue:249050

    Credit deferred revenue: 43950

Explanation:

Received  cash so u debit it

credit sale of software, you need to get ratio of original amount and multiply by cash received

255000/300000 x 293000 = 249050

original amount of technical support multiply by cash received -deferred revenue because you will still be performing technical support for "free".

45000/30000 x 293000 = 43950

Answer 2

Answer:

Dr Cash/ Accounts Receivables $249,050

Cr Revenue $249,050

Explanation:

The customer receives a discount for purchasing the bundle of goods because the sum of the stand-alone selling prices ($300,000) exceeds the promised consideration ($293,000). There is a discount of $7,0000

This would be split between the two performance obligations as follows

Technical support = $45,000/$300,000 X $7,000 = $1,050

Software = $255,000/$300,000 X $7,000 = $5,950

The software sale is $255,000 - $5,950 = $249,050