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REVENUE RECOGNITION If you sign up for and receive a new phone that would normally retail for...

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Accounting

REVENUE RECOGNITION
If you sign up for and receive a new phone that would normallyretail for $500 (cost to manufacture $380). We commit to a threeyear contract where we will have to pay back an amount that startsat $600 (to pay for the phone) but drops each month until itreaches zero at the end of 3 years (kind of like financing for thephone). We pay an activation fee of $35 along with the first monthof service that will be $70 each month for the next 36 months.After one year of service, we will be eligible for $100 off thelatest phone if we trade in the one year old phone for a new one.That rises to $200 after two years.

Show all journal entries needed to show revenue recognition.

Answer & Explanation Solved by verified expert
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This question is based on five step model of revenuerecognitions but we have pass a    See Answer
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