Question

Nash Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2017, Nash entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $10,200 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 $8,100. In addition, Walleye agrees to pay an additional $20,400 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.

Prepare the journal entries for Nash in 2017 and 2018 related to this service contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019

Prepare the journal entries for Nash in 2019 related to the modified service contract, assuming a prospective approach. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019

Repeat the requirements for part (b), assuming Nash and Walleye agree on a revised set of services (fewer bookkeeping services but more tax services) in the extended contract period and the modification results in a separate performance obligation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019
Jan. 1, 2017Dec. 31, 2017Jan. 1, 2018Dec. 31, 2018Jan. 1, 2019Dec. 31, 2019

Answer 1

Solution Date Particular Debit Gredet I Jan 17 cash al or 10200 To unearned revenue 10200 31-Dec-17 Unearned revenue alc 10200 To service revenue al 10200 1- Jan-18 cash alc 10200 To unearned revenue al 10200 31-Dec-18 unearned revenue alc | 10200 To service 10200 revenue alc

Particulars pate Gredst Debit 28500 -In-19 cash al or 29500 To unearned revenue 7125 31-Dec-19 7125 unearned revenue alc To service revenue ( 28500/4) Date particulars Debit Credit Cash al Dr I- 28500 Jan-19 To unearned revenue 28500 8100 |31-Dec-19 Uneaned pievenue alc 8100 To service revenue alc