Question

On September 1, Year 1, Gomez Company collected $23,100 in advance from a customer for services to be provided over a one-year period beginning on that date. How much revenue would Gomez Company report related to this contract on its income statement for the year ended December 31, Year 1

Answer 1

$7,700

Step-by-step explanation:

accrued revenue = $23,100 x 4/12 months = $7,700

the journal entry to record the cash

September 1

Dr Cash 23,100

Cr Unearned revenue 23,100

the adjusting journal entry

December 31

Dr Unearned revenue 7,700

Cr Service revenue 7,700