Problem:
I want assistance in understanding what the effect would be on the company financial statement with step by step instructions.
I answer that their will not be an effect, but I need some help to better understand how to compute and analyze this problem. Can I be provide with full description and step by step instructions on answering this problem.
Computer Technologies provides maintenance service for computers and office equipment for companies throughout the Northeast. The sales manager is elated because she closed a $300,000 three-year maintenance contract on December 29, 2007, two days before the company's year-end. "Now we will hit this year's net income target for sure," she crowed. The customer is required to pay $100,000 on December 9 (the day the deal was closed). Two more payments of $100,000 each are also required on December 29, 2008 and 2009. Discuss the effect that this event will have on the company's financial statements.