Megabyte Software Developers shipped its tax return preparation product to a customer on September 15, 2014. In addition to the software, Megabyte’s contract requires the company to provide (1) training to the customer’s accounting staff during October of 2014, (2) technical product support for one year starting October 1, 2014, and (3) an upgrade early in 2015 to the software that reflects last-minute changes in tax laws affecting tax returns for 2014. The customer paid the total contract price of $85,000 prior to product shipment. Megabyte would charge the following if these individual contract elements were sold separately:
Fair Value
Tax return preparation software ........ $ 70,000
Training customer’s staff ......... 10,000
Customer support ............ 15,000
Software upgrade ............ 5,000
Total fair value ............. $100,000

Required:
1. Prepare a journal entry to record receipt of the cash payment.
2. Determine the amount of revenue to be recognized in 2014 and prepare the necessary journal entry.