BC Company sells equipment service contracts that cover a two-year period. The sales price of each contract is P 600. ABC'S past experience is that, of the total pesos spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. ABC sold 1,000 contracts evenly throughout 20x8. In its December 31, 20x8 balance sheet, what amount should ABC report as deferred service contract revenue? __________ In its December 31, 20x9 income statement, what amount should ABC report as service contract revenue?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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  1. ABC Company sells equipment service contracts that cover a two-year period. The sales price of each contract is P 600. ABC'S past experience is that, of the total pesos spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. ABC sold 1,000 contracts evenly throughout 20x8.

In its December 31, 20x8 balance sheet, what amount should ABC report as deferred service contract revenue? __________

In its December 31, 20x9 income statement, what amount should ABC report as service contract revenue? ___________

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