Homework Answers
Monthly service revenue = $20,000
On April 1, 2020, revenue of $140,000 was received in cash for 7 months (20,000 x 7 = $140,000) i.e from April to October.
Hence, on December 31, 2020, two months revenue was accrued.
Total revenue over the 2 year contract = Monthly service revenue x 24
= 20,000 x 24
= $480,000
Revenue for the year ended 12/31/20 (for 9 months i.e. from April 1 o December 31) = Monthly service revenue x 9
= 20,000 x 9
= $180,000
Accounts receivable as of 31/12/20 = service revenue for 2 months
= 20,000 x 2
= $40,000
Unearned revenue as of 31/12/20 = $0
Cash
| service revenue | 140,000 | ||
| Ending balance | 140,000 |
Revenue
| Cash | 140,000 | ||
| Accounts receivable | 40,000 | ||
| Ending balance | 180,000 |
Unearned revenue
| Ending balance | 0 |
Accounts receivable
| Service REVENUE | 40,000 | ||
| Ending balance | 40,000 |
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Purchased architectural supplies on account from Burmingham
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