Question

Use the following information to answer the next two questions. BBC Company received $9,900 cash on February 1, 2014, from XYZ Company as advance payment for services BBC promised to perform for XYZ over the next three years on a continuous basis. Assume that BBC Company’s year-end is December 31 On its 2014 income statement, BBC would report revenue of $3,025 $3,300 $9,900 $2,750

Answer 1

To calculate the revenue reported by BBC Company on its 2014 income statement, divide the $9,900 advance payment by 3 years.

Step-by-step explanation:

To calculate the revenue reported by BBC Company on its 2014 income statement, we need to consider the advance payment of $9,900 received from XYZ Company. Since this payment is for services promised to be performed over the next three years, only the portion of the payment relating to 2014 should be recognized as revenue for that year.

To calculate the revenue reported by BBC Company on its 2014 income statement, divide the $9,900 advance payment by 3 years.

Thus, the revenue to be reported on the 2014 income statement would be $3,300 ($9,900 divided by 3 years). Therefore, the correct answer is $3,300.