Question - Tablet Tailors sells tablet PCs combined with Internet service (Tablet Bundle A) that permits the tablet to connect to the Internet anywhere (set up a Wi-Fi hot spot). The price for the tablet and a4-year Internet connection service contract is $490. The stand alone selling price of the tablet is $245 (cost to Tablet Tailors $150).Tablet Tailors sells the Internet access service independently for an upfront payment of $10000, plus $66 payments at the beginning of years 2-4 of the contract. With an imputed interest rate of 8%, the standalone value of the service is $270. On January 2, 2014, Tablet Tailors signed 100 contracts, receiving a total of $31,991 in cash (full payment of $490 each in cash, less the present value of the note for the future service plan payments), delivered tablets, and started service for 100 tablet packages.
Consider the following information and respond to the requirements indicated.
Prepare the journal entries when the contract is signed in January 2, 2014 and at December 31, 2016, for those contracts. Assume the modification does not result in a separate performance obligation.