Stranger Company sells appliance service contracts, agreeing to repair appliances for a two-year period. Stranger’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. Receipts from service contract sales for the two years ended December 31, 2027, are as follows: 2026 – P500,000 2027 – P600,000 Receipts from contracts are credited to unearned service contract revenue. Assume that all contract sales are made evenly during the year. What amount should Stranger report as unearned service contract revenue at December 31, 2027? a. 360,000 b. 480,000 c. 630,000 d. 470,000

Stranger Company sells appliance service contracts, agreeing to repair appliances for a two-year period. Stranger’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. Receipts from service contract sales for the two years ended December 31, 2027, are as follows: 2026 – P500,000 2027 – P600,000 Receipts from contracts are credited to unearned service contract revenue. Assume that all contract sales are made evenly during the year. What amount should Stranger report as unearned service contract revenue at December 31, 2027? a. 360,000 b. 480,000 c. 630,000 d. 470,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 63P

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