Can someone help me out with this accounting problem?

[karlitis]

Knowing that investors and creditors keep a close watch on a company’s liabilities in assessing liquidity and financial flexibility, Conner and Martin have been reviewing some of CM2’s liabilities reported on its balance sheet.
Part I: Unearned Revenues
Because the company offers service contracts to all of its customers, unearned revenue is a significant element of CM2’s current liabilities. As indicated in the 2010 forecasted financial statements (access file 4a on the website, Excel File,) the projected amount of unearned revenue on the forecasted balance sheet is $137,060. This amount is an increase over the amount of unearned revenue in 2009, which was $102,860.
This increase seems reasonable but you wonder whether it should be even higher, given the increased sales expected for CM2 products. Knepp and Lopez provide the following information about the service contracts expected to be outstanding at the end of 2010 based on recent trends. Customers prepay service contracts regardless of the length of the period of service.
Contract Price
Service Contract 1, dated October 1, 2010; service for six months $42,000
Service Contract 2, dated November 1, 2010; service for one year 75,000
Service Contract 3, dated December 1, 2010; service for one year 90,000

Instructions
(a) Based on the information provided, determine the amount of unearned revenue that CM2 should report on the balance sheet at the end of 2010. Assume that the company will provide services evenly over the contract period.
(b) Based on your calculation in (a), prepare the journal entry to record the correct amount of unearned revenue at the end of 2010.
(c) Write a memo explaining to Conner and Martin your analysis and the effect of the journal entry prepared in part (b) on the financial statements. Discuss why your numbers are more indicative of the actual obligation of CM2.
Part II: Contingencies
In Chapter 12, you summarized the accounting guidance on patents. Conner and Martin tell you that, while they are confident that the patent (referred to in Chapter 12, in the amount of $60,000) will benefit CM2 over its legal life, another company might challenge this patent in court. If this happens, CM2 might incur significant legal and court costs to defend the patent. They are concerned about what how these costs would be reported in the financial statements.

[juanito]

Little less party time and more homeworky time.