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: i) Service Contract Revenue

Service Contract Revenue

Note: insert rows within the print area as needed

12/31/21

Example debit

99,999

Example credit

99,999

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