Essay #1 Meyer and Smith (M&S) is an experienced computer de…
Questions
Essаy #1 Meyer аnd Smith (M&S) is аn experienced cоmputer dealer. M&S alsо оffers a number of services together with the computers that it sells. M&S also sells installation services and training services for the related computer equipment. Assume that M&S sells computers and its other services on a standalone basis or in bundles. Pricing, including several bundles, for these items is as follows. Computer Equipment $ 90,000 Installation $ 60,000 Training $ 30,000 Bundle A including equipment, installation and training $ 144,000 Bundle B including equipment and installation $ 120,000 (Note: Customers have the ability to purchase each of the items individually or by using the bundled pricing. The above information includes the relative standalone selling prices of each product/service. Also, the cost of the computer equipment to M&S has been intentionally excluded from this essay. COGS and Inventory adjustments are not required for exam purposes.) Sales Transaction: Assume that a customer purchases and pays in advance for Bundle A for $144,000 on Sept 1, 2020. Delivery of the equipment occurs on October 15, 2020. The equipment is installed on November 30, 2020. The training services begin on December 1, 2020 and end on January 1, 2021. Training services are completed evenly over the two months of December and January.Requirements: (a) . Identify the separate performance obligations related to the M&S revenue arrangement (i.e. the sale described above). (b) Indicate/determine the amount of revenue that should be allocated each performance obligation in the above sales transaction. (c) Prepare S&M's necessary (i.e. appropriate) journal entries, including adjusting entries, if any, for the year ended of 12/31/20. You may use the following Excel spreadsheet to develop your answers. Some information/formatting has been provided in the Excel spreadsheet. Developed answers should be copied and pasted into this Essay Question in the text box provided. You will upload your Excel spreadsheet in the 3rd question of this exam.