Question Two:
TrueTech Industries manufactures the Tri-Box System, a multiplayer gaming system allowing
players to compete with each other over the Internet. The Tri-Box System includes the physical
Tri-Box module as well as a one-year subscription to the Tri-Net multiuser platform of Internet-
based games and other applications.
TrueTech sells individual one-year subscriptions to the Tri-Net platform for $60, and the
individual Tri-Box modules for $140. As a package deal, TrueTech sells the Tri-Box System
(module plus subscription) for $180.
With each package, TruTech offers a promotional coupon. The coupon gives the Tri-Box
customer an opportunity to buy for $90 a headset that normally sells for $150 (a 40% discount).
The coupon must be redeemed within one year of the Tri-Box purchase. TrueTech estimates that
two thirds of the customers will take advantage of the coupon. performance obligation
Stand alone price=
in
coupon
On January 1, 2017, TrueTech delivers 1,000 Tri-Box Systems to CompStores and collected
$180,000 in cash. During 2017, the number of customers who used their coupons to purchase
the headsets is summarized below by quarter: 100 customers the first quarter, 120 in the second
quarter, 180 in the third quarter, and finally 200 customers in the fourth quarter.
Required: prepare all necessary journal entries to record the transactions described above for
True Tech Industries on January 1, and at the end of each quarter.
