Question

Mary signed up and paid $600 for a 6 month ceramics course on June 1st with Choplet Ceramics. As of August 1st, Choplet’s accounting records would indicate: Multiple Choice $200 of revenue, $400 of deferred revenue $400 of revenue, $200 of accounts receivable $600 of revenue, $600 of cash

Answer 1

$200 of revenue, $400 of deferred revenue

Step-by-step explanation:

The journal entry to record the entry on August 1 is shown below:

Unearned revenue A/c Dr $200

To Revenue $200

(Being the two-month revenue is recorded)

The computation is shown below:

= Six-month revenue × number of months ÷ total number of months

= $600 × 2 months ÷ 6 months

= $200

The two months is calculated from June 1 to August 1

The remaining balance would be transferred to the deferred revenue account

= $600 - $200

= $400