On March 1, 20x4, an appliance company sold a flat-screen TV for $8,000 along wi

Question

On March 1, 20x4, an appliance company sold a flat-screen TV for $8,000 along with a $600 service contract for any parts and labor on repairs not covered under the manufacturer’s warranty for two years from the date of sale. Cash amounting to $8,600 was received at the time of sale. The customer took delivery of the TV on the date of the sale. Assume that historical experience has shown that service contract repairs occur evenly throughout the two-year life of the service contract. How much revenue, in total, should be recognized from this transaction during the year 20x4?

  $0

  $8,000

  $1,433

  $8,250

  $8,600

  $0

  $8,000

  $1,433

  $8,250

  $8,600

Explanation / Answer

$8,600

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