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July 31 Company receives $28,000 from Copa Company for advertising services of $100,000 provided in July. The other $72,000 is to be received in August.

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Final answer:

The scenario involves recognizing $100,000 in revenue for advertising services provided, of which $28,000 has been received in cash and the remaining $72,000 is accounted for as receivable. It illustrates accounting practices for revenue recognition. In considering whether a business should continue operations, revenues and variable costs are key factors.

Step-by-step explanation:

The question describes a partially completed transaction where a company has received $28,000 for services provided worth $100,000, with the expectation of receiving the remaining $72,000 later. This scenario is related to the accounting principles of revenue recognition and accounts receivable. In such a case, where the service has already been provided, the full $100,000 can be recognized as revenue even though only part of the payment has been received. The initial $28,000 received would be recorded as cash, and the remaining $72,000 as accounts receivable, which is money owed to the company.

In a broader business context, understanding whether a center should continue in business often involves analyzing revenues and variable costs. For example, a center with revenues of $20,000 against variable costs of $15,000 would typically continue operations as it is covering its variable costs and contributing to fixed costs and eventual profit.

User Mitra Ghorpade
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