Oriole Financial Services performs bookkeeping and tax-reporting services to startup companies in the Hiawatha area. On January 1, 2025, Oriole entered into a 3-year service contract with Pharoah Tech. Pharoah promises to pay $21,600 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 $19,400. In addition, Pharoah agrees to pay an additional $48,500 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. (a) Prepare the journal entries for Oriole in 2025 and 2026 related to this service contract. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)

Oriole Financial Services performs bookkeeping and tax-reporting services to startup companies in the Hiawatha area. On January 1, 2025, Oriole entered into a 3-year service contract with Pharoah Tech. Pharoah promises to pay $21,600 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 $19,400. In addition, Pharoah agrees to pay an additional $48,500 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. (a) Prepare the journal entries for Oriole in 2025 and 2026 related to this service contract. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)

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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