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. (a) Your Answer Correct Answer Your answer is correct. Prepare the jourmal entries for Coronado in 2020 and 2021 related to this service contract. (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.) Date Account Titles and Explanation Debit Credi Jan. 1, 2020 cash 9000 Unearned Service Revenue Dec. 31, 2020 Unearned Service Revenue 9000 Service Revenue Jan. 1, 2021 Cash 9000 Unearned Service Revenue Dec. 31, 2021 Unearned Service Revenue 9000
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. (a) Your Answer Correct Answer Your answer is correct. Prepare the jourmal entries for Coronado in 2020 and 2021 related to this service contract. (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.) Date Account Titles and Explanation Debit Credi Jan. 1, 2020 cash 9000 Unearned Service Revenue Dec. 31, 2020 Unearned Service Revenue 9000 Service Revenue Jan. 1, 2021 Cash 9000 Unearned Service Revenue Dec. 31, 2021 Unearned Service Revenue 9000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 7C: On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial...
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Transcribed Image Text: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.
(a)
Your Answer
Correct Answer
Your answer is correct.
Prepare the jourmal entries for Coronado in 2020 and 2021 related to this service contract. (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.)
Date
Account Titles and Explanation
Debit
Credi
Jan. 1, 2020
cash
9000
Unearned Service Revenue
Dec. 31, 2020
Unearned Service Revenue
9000
Service Revenue
Jan. 1, 2021
Cash
9000
Unearned Service Revenue
Dec. 31, 2021
Unearned Service Revenue
9000
Transcribed Image Text:Prepare the joumal 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 "No
entry" for the account titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credi
Jan. 1, 2022
cash
25000
Unearned Service Revenue
Dec. 31, 2022 v
Unearned Service Revenue
6250
Service Revenue
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List of Accounts
(c)
Repeat the requirements for part (b), assuming Coronado and Walleye agree on a revised set of services (fewer bookkeeping
services but more tax services) in the extended contract period and the modification results in a separate performance obligation.
(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.)
Date
Account Titles and Explanation
Debit
Credi
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