Reference no: EM132637049

Concord Enterprises Ltd. sells a specialty part that is used in widescreen televisions and provides the ultimate in screen clarity. To promote sales of its product, Concord launched a program with some of its smaller customers. In exchange for making Concord their exclusive supplier, Concord guarantees these customers to their creditors so that Concord will assume the customers' long-term debt in the event of non-payment to the creditors. In addition to charging for parts, Concord also charges a fee to customers who take the guarantee program. It bases the fee on the time frame that the guarantee covers, which is typically three years. In the current ?scal year, the fees collected amounted to $27,660 for the three-year coverage period. Six months before Concord's ?scal year end, one of its customers, Hutter Corp., began to experience ?nancial dif?culties and missed two months of mortgage payments. Hutter's lender then called on Concord to make the mortgage payments. At its ?scal year end on December 31, 2020, Concord had recorded a receivable of $13,830 related to the payments made by Concord on Hutter's behalf. Hutter owes the lender an additional $27,660 at this point. The lender is thinking of putting a lien on Hutter's assets that were pledged as collateral for the loans. However, the collateral involves rights to the development of new state-of-the-art three-dimensional television technology that is still unproven.

Concord follows ASPE.

Question (a) Prepare all required journal entries and adjusting entries on Concord's books to recognize the transactions and events described above. (Hint: Use the accounts Service Revenue, Loss on Guarantee, and Liability for Guarantee.)