Entity A is operated as an internet cafe, which locates in Hung Hom. It opens 24/7 (24 hours a day and 7 days a week). Recently, it enters into a short-term contract with Entity B, the largest local internet game server-workstation service provider on 1 January 2019. The contract period is 4 months from 1 February 2019 to 31 May 2019. On 31 January 2019, the internet game server and the workstations are delivered to Entity A.

This contract includes the provision of one electronic game server with ten workstations and a 24/7 technical supporting service to Entity A over the contract period. According to the contract terms, Entity A is not required to return the game server and the ten workstations back to Entity B at the contract end. Entity A pays a monthly fixed fee of $68,800 to Entity B at every month-end.

Entity B sells the same internet game server with ten workstations to other customers alone for $360,000. The original cost of them is $235,000. In addition, it also provides the same 24/7 technical supporting service to other customers alone for $10,000 per month.

REQUIRED:

Prepare journal entries of the seller on 1 January 2019, 31 January 2019, 1 February 2019, 28 February 2019, 1 March 2019, 31 March 2019, 1 April 2019, 30 April 2019, 1 May 2019 and 31 May 2019 in accordance with the relevant accounting standards.

Answer rating: 100% (QA)

Date Account Name Debit Credit 31 Jan19 Receivable Ac Dr 23520000 To Contract liability Serverworkst... View the full answer