Prepare the journal entries for sunland

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Question - Sunland Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Sunland entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $9,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $7,000. In addition, Walleye agrees to pay an additional $18,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract.

Required - Prepare the journal entries for Sunland in 2020 and 2021 related to this service contract.

Reference no: EM133185029

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