JustKitchens Inc. provides services to restaurants and hotels. The company supplies paper products, tableware, cookware, restaurant and kitchen equipment, and cleaning supplies. On January 2, 2017, Just - Kitchens enters into a contract with a local restaurant chain to provide its services for 3 years at a cost of $10,000 per year. The restaurant chain pays the total contract fee on January 2, 2017. JustKitchens's stand-alone selling price is also $10,000 per year. After 2 years, the restaurant asks to modify the contract. On January 2, 2019, the companies agree to reduce the fee for the third year to $9,000 in exchange for extending the contract for 2 additional years at a fee of $11,000 per year. This modification is agreed to by both parties, and on that date the restaurant chain pays for the additional 2 years of service and deducts $1,000 for the adjustment to the original contract. The $11,000 fee for the additional years is the same as Justkitchens's stand-alone price. Required: !. Prepare the journal entries that JustKitchens would make only for Dec 31, 2019, Dec 31 2020, and Dec 31, 2021. Each entry will be in the fashion below 12/31/19 Unearned Revenue XXXX Service Revenue XXXXXX The ANSWER IS NOT $9,000 or $11,000 For ANY of the 3 years,,,repeat NOT!!!!!
JustKitchens Inc. provides services to restaurants and hotels. The company supplies paper products, tableware, cookware, restaurant and kitchen equipment, and cleaning supplies. On January 2, 2017, Just - Kitchens enters into a contract with a local restaurant chain to provide its services for 3 years at a cost of $10,000 per year. The restaurant chain pays the total contract fee on January 2, 2017. JustKitchens's stand-alone selling price is also $10,000 per year. After 2 years, the restaurant asks to modify the contract. On January 2, 2019, the companies agree to reduce the fee for the third year to $9,000 in exchange for extending the contract for 2 additional years at a fee of $11,000 per year. This modification is agreed to by both parties, and on that date the restaurant chain pays for the additional 2 years of service and deducts $1,000 for the adjustment to the original contract. The $11,000 fee for the additional years is the same as Justkitchens's stand-alone price. Required: !. Prepare the journal entries that JustKitchens would make only for Dec 31, 2019, Dec 31 2020, and Dec 31, 2021. Each entry will be in the fashion below 12/31/19 Unearned Revenue XXXX Service Revenue XXXXXX The ANSWER IS NOT $9,000 or $11,000 For ANY of the 3 years,,,repeat NOT!!!!!
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 2P: JustKitchens Inc. provides services to restaurants and hotels. The company supplies paper products,...
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Transcribed Image Text:JustKitchens Inc. provides services to restaurants and hotels. The company supplies paper products,
tableware, cookware, restaurant and kitchen equipment, and cleaning supplies. On January 2, 2017, Just
- Kitchens enters into a contract with a local restaurant chain to provide its services for 3 years at a cost
of $10,000 per year. The restaurant chain pays the total contract fee on January 2, 2017. JustKitchens's
stand-alone selling price is also $10,000 per year. After 2 years, the restaurant asks to modify the
contract. On January 2, 2019, the companies agree to reduce the fee for the third year to $9,000 in
exchange for extending the contract for 2 additional years at a fee of $11,000 per year. This modification
is agreed to by both parties, and on that date the restaurant chain pays for the additional 2 years of
service and deducts $1,000 for the adjustment to the original contract. The $11,000 fee for the additional
years is the same as Just Kitchens's stand-alone price. Required: !. Prepare the journal entries that
JustKitchens would make only for Dec 31, 2019, Dec 31 2020, and Dec 31, 2021. Each entry will be in the
fashion below 12/31/19 Unearned Revenue XXXX Service Revenue XXXXXX The ANSWER IS NOT $9,000
or $11,000 For ANY of the 3 years,,,repeat NOT!!!!!
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