Yurman Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $720,000 at December 31, 2013 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $180,000 at December 31, 2013. Outstanding service contracts at December 31, 2013 expire as follows: What amount should be reported as unearned service contract revenues in Yurman's December 31, 2013 balance sheet?
A) $540,000.
B) $495,000.
C) $360,000.
D) $330,000.

Question

Yurman Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $720,000 at December 31, 2013 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $180,000 at December 31, 2013. Outstanding service contracts at December 31, 2013 expire as follows:  What amount should be reported as unearned service contract revenues in Yurman's December 31, 2013 balance sheet?
A) $540,000. 
B) $495,000. 
C) $360,000. 
D) $330,000.

Quizplus · Accepted Answer

The Answer of Yurman Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $720,000 at December 31, 2013 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $180,000 at December 31, 2013. Outstanding service contracts at December 31, 2013 expire as follows:  What amount should be reported as unearned service contract revenues in Yurman's December 31, 2013 balance sheet?
A) $540,000. 
B) $495,000. 
C) $360,000. 
D) $330,000.

Yurman Co Sells Major Household Appliance Service Contracts for Cash