(i) Service Contract Revenue: In mid-year, TouchBase signed a 2-year contract to provide repair services for the computers at a local school district, beginning July 1, 2021. The school district paid an initial lump sum of $80,000, and agreed to pay an additional $4,200 each month. Only the $105,200 cash received ($80k + 6 x $4.2k) during 2021 was all recorded as “Revenue - Service Contract”. The contract also provides for a $10,000 bonus at the end of each 12-month contract period (each June 30) if TouchBase meets a series of performance targets during that time. As the end of 2021 approaches, TouchBase estimates the probability of earning the bonus on June 30, 2022 and 2023 to be 70%. 

Cost of Services: TouchBase had employees track the cost of providing repair services, and recorded them in a “COS - Repair Services” account. During 2020 and 2021, these amounts were $206,010 and $208,020, respectively. For 2021, TouchBase employees separately recorded the cost of providing extended warranty services in “COS – Service Contract”; the amount was $63,120. Note: no issues identified.

Journal Entry: j) Income Tax				Income Tax						Note: insert rows within the print area as needed
12/31/21	Example debit			99,999
		Example credit			99,999
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Answer rating: 100% (QA)

3 QUIZ Iune 30th 2023 Liy 1 2021 80 000 Initial lu... View the full answer