Question

Perkins Inc. accepted an advance of $1,800 on November 1, 2016 for providing IT helpdesk services for the following six months. Perkins recorded the $1,800 as revenue on November 1 and has not recorded any other entries related to this transaction. On December 31, 2016, Perkins will debit or credit revenue for what amount

Answer 1

Step-by-step explanation:

The computation is shown below:

= Recorded amount of revenue × given months ÷ number of months

= $1,800 × 2 months ÷ 6 months

= $600

The 2 months is computed from November 1 to December 31

The journal entry is shown below:

Deferred revenue A/c Dr $600

To Service revenue A/c $600

(Being the deferred revenue is recorded)