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Folks Company sells appliance service contracts agreeing to repair appliances for two - year period

Accounting

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Folks Company sells appliance service contracts agreeing to repair appliances

for two

-

year period.

The past experience is that, of the total amount spent for repairs on service contracts, 40%

is incurred evenly during the fi

rst contract year and 60% is incurred evenly during the

second contract year.

Receipts from service contract sales are P500,000 for 2020 and P600,000 for 2021.

Receipts from contracts are credited to unearned service revenue. All sales are made evenly

dur

ing the year.

Required:

1.

What is the contract revenue for 2020?

2.

What is the unearned revenue on December 31, 2020?

3.

What is the contract revenue for 2021?

4.

What is the unearned revenue on December 31, 2021?