Revenue recognition problem

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Reference no: EM13863724

Revenue Recognition Problem

Tyler Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2014, Tyler entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $11,700 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 $9,300. In addition, Walleye agrees to pay an additional $23,400 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.

Records the journal entries for:

jan 1 2014

Dec 31 2014

jan 1 2015

dec 31 2015

Reference no: EM13863724

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