Final answer:
Josh Smith, an attorney, has received a $37,000 cash advance for services to be performed over the next year, which will be recorded as unearned revenue and recognized as income as the services are provided.
Step-by-step explanation:
Josh Smith, an attorney, received a substantial cash advance from his client, James Company. This advance of $37,000 is for legal services that are to be rendered over the course of the next twelve months. This scenario is typically treated as unearned revenue or a liability in accounting, as the services have yet to be performed. As Josh Smith provides the services, the unearned revenue will be recognized as earned revenue over the twelve-month period, usually on a straight-line basis unless the service terms specify otherwise.
In terms of accounting and business, Smith will need to manage this advance carefully. It will initially be recorded on the balance sheet as a liability and should be recognized as income in a manner that matches the completion of the service.