Question

The following activities occurred in 2019:

1. Performed advertising services on account, $61,250.
2. Received cash payments for services performed in 2018 of $11,700.
3. Received deposits from customers for advertising services to be performed in 2020, $3,400.
4. Made payments to suppliers on account, $5,220.
5. Incurred $50,100 of operating expenses; $43,400 was paid in cash and $6,700 was on account and unpaid as of the end of the year.

What is the amount of revenue that will be reported on the income statement for the year ended December 31, 2019 assuming that the company uses the accrual basis of accounting?

a. $61,250
b. $56,030
c. $64,650
d. $43,400

Answer 1

The amount of revenue reported on the income statement for 2019 is $61,250.

Step-by-step explanation:

The amount of revenue that will be reported on the income statement for the year ended December 31, 2019 assuming that the company uses the accrual basis of accounting is $61,250.

Under the accrual basis of accounting, revenue is recognized when it is earned, regardless of when the cash is received. In this case, the company performed advertising services on account, which means the revenue is recognized when the services were performed, even though the cash may not have been received yet. Therefore, the revenue from the advertising services performed in 2019 would be reported as $61,250.