Question

Orange Inc. is a cellphone manufacturer and service provider. On Nov 1^st, 2019, they sell 1000 O-bundles to consumers for $800 each and receive cash from consumers. Each O-bundle contain one O-phone, a 6 month subscription for the Orange-net cell-phone service, and a packet of orange candy. O-phones retail for $750, Orange-net service retails for $25 a month, and the orange candy retails for $5 a pack. Each O-phone costs $400 to manufacture, while each orange candy pack was purchased from a manufacturer for $1.50 including freight costs.

Provide the transactional journal entries for Nov 1^st, 2019 and adjusting entries for Dec 31^st 2019

Answer 1

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	Individual Price	Ratio	Transaction Price	Allocation
O-Phone	$                                                                                                   750	96.15%	$                            800	$       769.23
Net Cell	$                                                                                                     25	3.21%	$                            800	$         25.64
Orange Candy	$                                                                                                       5	0.64%	$                            800	$            5.13
	$                                                                                                   780			$       800.00
Nov 1	Cash	$       800.00
	Sales Revenue- Ophone		$                      769.23
	Unearned Service Revenue-Net Cell		$                        25.64
	Sales Revenue-Candy		$                           5.13
	(To record sale)
Nov 1	Cost of goods Sold	$       401.50
	Inventory-OPHONE		$                      400.00
	Inventory-Candh		$                           1.50
Dec 31	Unearned Service Revenue-Net Cell	$            8.55
	Service Revenue		$                           8.55
	(To record service revenue earned) $25.64/6*2