Homework Answers
| Question No | Date | Account titles and explanation | Debit | Credit | ||
| 1 | 01-May-17 | Cash | $12,000 | |||
| Unearned revenue | $12,000 | |||||
| (cash received for contract recorded) | ||||||
| 2 | Assets | Liabilities | Stockholders' eq | Income statement | St. of cash flows | |
| 12000 | 12000 | $0 | $0 | 12000 | Operating activities | |
| 3 | Service revenue that ABC should show on its income statement of 2017 | |||||
| Total contract value | $12,000 | |||||
| Period of contract | 12 months | |||||
| Period expired in current year(2017) | 8 months | |||||
| Hence, Revenue to be recognised = | 12,000/12*8 | |||||
| $8,000 | ||||||
| 4 | Date | Account titles and explanation | Debit | Credit | ||
| 31-Dec-17 | Unearned revenue | $8,000 | ||||
| Revenue | $8,000 | |||||
| (revenue for 8 months recorded) | ||||||
| 5 | Assets | Liabilities | Stockholders' eq | Income statement | St. of cash flows | |
| -8000 | $0 | $8,000 | 0 | |||
*Feel free to ask any doubt related to this topic in the comment section. Please give your valuable feedback.
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