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Dot Point, Inc. is a retailer of washers and dryers and offers a three-year service contract on each appliance sold.

Dot Point, Inc. is a retailer of washers and dryers and offers a three-year service contract on each appliance sold. Although Dot Point sells the appliances on an installment basis, all service contracts are cash sales at the time of purchase by the buyer. Collections received for service contracts should be recorded as


a direct addition to retained earnings.


deferred service revenue.


a reduction in installment accounts receivable.


service revenue.

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