Database Services Sells Service Plans for Commercial Computer Maintenance

question 11

Essay

Database Services sells service plans for commercial computer maintenance.The price for each plan is $1,350 per year,paid in advance.On October 1,2017,a service plan was sold to a new customer for cash,and the plan covers the period October 1,2017 to September 30,2018.Prepare the December 31,2017 adjusting entry.

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Definitions:

Corporations

Legal entities that are separate and distinct from their owners, with the ability to own assets, incur liabilities, and sell stock.

Double Taxation

A taxation principle referring to income taxes paid twice on the same source of income. This usually occurs with corporate income taxed at both the corporate level and again at the shareholder level on dividends.

Disadvantage

A condition or situation that makes it more difficult for someone or something to succeed or achieve a desired outcome.

Income Taxes

Taxes levied by governments on the income earned by individuals and entities within their jurisdiction.