Denny 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 Revenues.This account had a balance of $1,100,000 at December 31, 2010 before year-end adjustment.Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $325,000 at December 31, 2010. What amount should be reported as Unearned Service Revenues in Denny's December 31, 2010 balance sheet?
A)$775,000.
B)$530,000.
C)$250,000.
D)$325,000.

Question

Denny 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 Revenues.This account had a balance of $1,100,000 at December 31, 2010 before year-end adjustment.Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $325,000 at December 31, 2010.  What amount should be reported as Unearned Service Revenues in Denny's December 31, 2010 balance sheet?
A)$775,000. 
B)$530,000. 
C)$250,000. 
D)$325,000.

Quizplus · Accepted Answer

The Answer of Denny 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 Revenues.This account had a balance of $1,100,000 at December 31, 2010 before year-end adjustment.Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $325,000 at December 31, 2010.  What amount should be reported as Unearned Service Revenues in Denny's December 31, 2010 balance sheet?
A)$775,000. 
B)$530,000. 
C)$250,000. 
D)$325,000.

Denny CoSells Major Household Appliance Service Contracts for Cash