Explore BrainMass

Unearned Revenue

The following service contracts, for which Padres Co receives full pymnt on the contract date, have been entered into with special customers:

Date Amt Term
7/1/05 $70,000 35 months
10/1/05 $100,000 25 months
4/1/06 $120,000 40 months

Padres Co completes work on the contracts evenly over the life of each contract and their fiscal year ends 12/31.

Compute the balance of unearned service revenue and the amount of unearned service revenue classified as currently liability at :
1) 12/31/05
2) 12/31/06
3) 12/31/07

CLUE must match: The sum of Long Term Liabilities at 12/31/05, 12/31/06, and 12/31/07 is $162,000.

Solution Preview

Please see the attached file.

Since the contracts are evenly spread over the life, we can find the ...

Solution Summary

The solution explains how to calculate the balance in the unearned revenue account given the completion of a project.