(TCO D) Felton Co. sells major household appliance service contracts for cash. T

Question

(TCO D) Felton Co. sells major household appliance service contracts for cash. The service contracts are for a 1-year, 2-year, or 3-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $480,000 at December 31, 2009 before year-end adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $120,000 at December 31, 2009. Outstanding service contracts at December 31, 2009 expire as follows: During 2010 During 2011 During 2012 $100,000 $160,000 $70,000 What amount should be reported as unearned service contract revenues in Felton's December 31, 2009 balance sheet? (Points : 5)

a 360,000

b 330,000

c 240,000

d 220,000

Explanation / Answer

b. $330,000 ($100000+$160000+$70000)

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