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Max collects a nonrefundable up-front fee of $192 when a new customer signs up for a...

Max collects a nonrefundable up-front fee of $192 when a new customer signs up for a 24-month contract for services. A monthly fee of $32 is also assessed for each customer. How much revenue does Max record on the date the contract is signed?

$192

$40

$224

$0

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Answer #1

Correct answer----------$ 0

.

The amount received from customer $192 will be credited to unearned revenue since the revenue is not yet earned and the amount received is an advance for services to be performed in future.

The revenue will be recorded over 24 months in proportion of service provided.

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