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What amount should be reported as unearned service

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Question - Close Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to unearned service contract revenues. This account had a balance of $480,000 at December 31, 2015 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, 2015. Outstanding service contracts at December 31, 2015 expire as follows:

During 2016 - $100,000

During 2017 - $160,000

During 2018 - $70,000

What amount should be reported as unearned service contract revenues in Close's December 31, 2015 balance sheet?

a. $360,000.

b. $330,000.

c. $240,000.

d. $220,000.

Reference no: EM132228877

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