Optimus Ltd provides telephone services to its customers. Optimus recently advertised the following; $300 bundle including a
Question:
Optimus Ltd provides telephone services to its customers. Optimus recently advertised the following; $300 bundle including a mobile phone and a phone sim card sold for $240 if purchased online, which the customer pays at the time of entering into the contract. Once the contract is signed by a customer, Optimus Ltd will supply a mobile handset and a prepaid sim card
If these items were sold separately, the handset would be sold for $200 and the prepaid sim card would provide access to $100 worth of phone calls, total of $300.
The prepaid sim card will be active until either the $100 worth of calls is expired or the end of a three-month period beginning on the day that the contract is entered into.
The directors are wondering how to apply the five-step model per accounting standard to record revenue for online sales including journal entries. The directors are keen to understand each step with thorough explanations. The company’s financial reports are prepared on a monthly basis.
Required: Provide advice including journal entries to the managing director, with relevant references to the Accounting Standards in your answer
Expert Answer:
Answer The fivestep model per accounting standard to record revenue for online s... View the full answer
