A company separately sells home security equipment and 12 months of system monitoring service for 160 and 320, respectively the company sells an equiment / monitoring service begins immediately after the equipment is delivered and installed on january 1Required: Determine the dollars of revenue that should be allocated to the equipment for each bundled sale. Determine the dollars of revenue that should be allocated to the service for each bundled sale. Determine the dollars of Sales Revenue and Service Revenue from the January 1 bundled sale that should be reported in the income statement for the period January 1-31.

Question

Bozley

Business

29 February, 16:32

A company separately sells home security equipment and 12 months of system monitoring service for 160 and 320, respectively the company sells an equiment / monitoring service begins immediately after the equipment is delivered and installed on january 1Required: Determine the dollars of revenue that should be allocated to the equipment for each bundled sale. Determine the dollars of revenue that should be allocated to the service for each bundled sale. Determine the dollars of Sales Revenue and Service Revenue from the January 1 bundled sale that should be reported in the income statement for the period January 1-31.

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Colon · Answer 1

1 Revenue allocated to the equipment for each bundled Sale {720*320 / (320+640) } = $ 240

2 Revenue allocated to the service for each bundled Sale {720*640 / (320+640)) } = $ 480

3 Sales revenue to be reported in income statement $ 240

4 Service revenue to be reported in income statement (480/12) = $40