Coronado Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. OnJanuary 1, 2020, Coronado entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $9,000 at the beginningof each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract ismodified and the fee for the third year of services is reduced to $7,000. In addition, Walleye agrees to pay an additional $18,000 at thebeginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extendedcontract services are similar to those provided in the first 2 years of the contract.(a)Your AnswerCorrect AnswerYour answer is correct.Prepare the journal entries for Coronado in 2020 and 2021 related to this service contract. (Credit account titles are automaticallyindented when the amount is entered. Do not indent manually. If no entry is required, select "No entry for the account titles and enter 0 forthe amounts.)DateAccount Titles and ExplanationDebitCrediJan. 1, 2020cash9000Unearned Service RevenueDec. 31, 2020Unearned Service Revenue9000Service RevenueJan. 1, 2021Cash9000Unearned Service Revenue (b)Prepare the journal entries for Coronado in 2022 related to the modified service contract, assuming a prospective approach.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "Noentry" for the account titles and enter O for the amounts.)DateAccount Titles and ExplanationDebitCredieTextbook and MediaList of Accounts

Journal entries refers to reporting of the business transactions into the books of accounts and it…

Coronado Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Coronado entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $9,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $7,000. In addition, Walleye agrees to pay an additional $18,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract.

Coronado Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Coronado entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $9,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $7,000. In addition, Walleye agrees to pay an additional $18,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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