Cobra Company sells appliance service contracts agreeing to repair appliances for a three-year period. The past experience is that the total amount spent for repairs on service contracts, 40% is incurred evenly during the first contract year, 25% is incurred evenly during the second contract year and 35% is incurred evenly during the 3rd contract year. Receipts from service contract sales are P500,000 for 2020 and P600,000 for 2021. How much is the balance of unearned revenue pertaining to 2020 sales as of December 2021?
Cobra Company sells appliance service contracts agreeing to repair appliances for a three-year period. The past experience is that the total amount spent for repairs on service contracts, 40% is incurred evenly during the first contract year, 25% is incurred evenly during the second contract year and 35% is incurred evenly during the 3rd contract year. Receipts from service contract sales are P500,000 for 2020 and P600,000 for 2021. How much is the balance of unearned revenue pertaining to 2020 sales as of December 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Cobra Company sells appliance service contracts agreeing to repair appliances for
a three-year period.
The past experience is that the total amount spent for repairs on service
contracts, 40% is incurred evenly during the first contract year, 25% is incurred
evenly during the second contract year and 35% is incurred evenly during the 3rd
contract year.
Receipts from service contract sales are P500,000 for 2020 and P600,000 for 2021.
How much is the balance of unearned revenue pertaining to 2020 sales as of December 2021?
Transcribed Image Text:Cobra Company sells appliance service contracts agreeing to repair appliances for
a three-year period.
The past experience is that the total amount spent for repairs on service
contracts, 40% is incurred evenly during the first contract year, 25% is incurred
evenly during the second contract year and 35% is incurred evenly during the 3rd
contract year.
Receipts from service contract sales are P500,000 for 2020 and P600,000 for
2021.
How much is the balance of unearned revenue pertaining to 2020 sales as of December 31,
2021?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education