Dunne Co. sells equipment service contracts that cover a two­year period. The sales price of each contract is $600.  Dunne's past experience is that, of the total dollars spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. Dunne sold 1,000 contracts evenly throughout the  current year.

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
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Dunne Co. sells equipment service contracts that cover a two­year period. The sales price of each contract is $600.  Dunne's past experience is that, of the total dollars spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. Dunne sold 1,000 contracts evenly throughout the  current year. In its December 31 balance sheet, what amount should Dunne report as deferred service contract   revenue?

Group of answer choices
$540,000
$480,000
$360,000
$300,000
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