19. ABC Company sells appliance service contracts agreeing to repair appliances for a two-year period. ABC’s past experience is that, of the total dollars spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. Receipts from service contract sales for the two years ended December 31, year 2, are as follows: Year 1 P500,000 Year 2 600,000 Receipts from contracts are credited to unearned service contract revenue. Assume that all contract sales are made evenly during the year. What amount should ABC report as unearned service contract revenue at December 31, year 2? a. P360,000 b. P630,000 c. P480,000 d. P470,000
19. ABC Company sells appliance service contracts agreeing to repair appliances for a two-year period. ABC’s past experience is that, of the total dollars spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. Receipts from service contract sales for the two years ended December 31, year 2, are as follows: Year 1 P500,000 Year 2 600,000 Receipts from contracts are credited to unearned service contract revenue. Assume that all contract sales are made evenly during the year. What amount should ABC report as unearned service contract revenue at December 31, year 2? a. P360,000
b. P630,000
c. P480,000
d. P470,000
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
