Anthony Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2025, Anthony entered into a 3-year service contract with Sweet Acacia Tech. Sweet Acacia promises to pay $9,600 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 $7,600. In addition, Sweet Acacia agrees to pay an additional $19,200 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
please and thank you
Current Attempt in Progress
Anthony Financial Services performs bookkeeping and tax-reporting services to startup companies in the
Oconomowoc area. On January 1, 2025, Anthony entered into a 3-year service contract with Sweet Acacia Tech. Sweet
Acacia promises to pay $9,600 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 $7,600. In addition, Sweet Acacia agrees to pay an additional $19,200 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 Anthony in 2025 and 2026 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. List all debit
entries before credit entries. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Ci
I
Prepare the journal entries for Anthony in 2027 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. List all debit entries before credit entries. Record journal entries in the order
presented in the problem.)
Date
Account Titles and Explanation
Debit
Transcribed Image Text:Current Attempt in Progress Anthony Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2025, Anthony entered into a 3-year service contract with Sweet Acacia Tech. Sweet Acacia promises to pay $9,600 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 $7,600. In addition, Sweet Acacia agrees to pay an additional $19,200 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 Anthony in 2025 and 2026 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. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Ci I Prepare the journal entries for Anthony in 2027 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. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit
Prepare the journal entries for Anthony in 2027 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 O for
the amounts. List all debit entries before credit entries. Record journal entries in the order
presented in the problem.)
Date
Account Titles and Explanation
Debit
Repeat the requirements for part (b), assuming Anthony and Sweet Acacia 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. List all debit entries before credit entries. Record journal entries in
the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Transcribed Image Text:Prepare the journal entries for Anthony in 2027 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 O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Repeat the requirements for part (b), assuming Anthony and Sweet Acacia 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. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit
Expert Solution
steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Methods of accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education