Felton co sells major household appliance service contracts, Ask an Expert

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Felton Co. sells major household appliance service contracts for cash. The service contracts are for a 1-year, 2-year, or 3-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $480,000 at December 31, 2009 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $120,000 at December 31, 2009. Outstanding service contracts at December 31, 2009 expire as follows:

During 2010 During 2011 During 2012
$100,000 $160,000 $70,000

What amount should be reported as unearned service contract revenues in Felton's December 31, 2009 balance sheet?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9976250

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