For each unit of computer sold, Blue Company sells a service contract. The contract provides that the computers sold will be repaired by the company within a period of three years from the date of sale. Based on company’s experience, 10% of repairs are done in the 1st year from the date of sale, 30% in the 2nd year and 60% in the 3rd year.  Sale of service contracts for the year 2019, 2020 and 2021 are; P500,000; P600,000 and P700,000 respectively.  Sale of service contracts and repairs are made evenly throughout the year. How much is the unearned service contract revenue at December 31, 2021?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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For each unit of computer sold, Blue Company sells a service contract. The contract provides that the computers sold will be repaired by the company within a period of three years from the date of sale. Based on company’s experience, 10% of repairs are done in the 1st year from the date of sale, 30% in the 2nd year and 60% in the 3rd year.  Sale of service contracts for the year 2019, 2020 and 2021 are; P500,000; P600,000 and P700,000 respectively.  Sale of service contracts and repairs are made evenly throughout the year. How much is the unearned service contract revenue at December 31, 2021?

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