BUGS Appliance Company's accountant has been reviewing the firm's past television sales. For the past years, BUGS has been offering a special service warranty on all televisions sold. With the purchase of a television, the customer has the right to purchase a 3-year service contract for an extra P600.

20072006

Television sales in units550460

Sales price per unitP5,000P4,000

Number of service contracts sold350300

Expenses relating to television warranties38,52013,400

BUGS' accountant has estimated from past records that the pattern of repairs has been 40% in the year of sale, 36% first year after sale and 24% on 2^ndyear of sale. Sales of the contracts are made evenly during the year.

What is the adjusted balance of the unearned service contract as of December 31, 2007?