Question

Sunland Company collected $22400 in May of 2016 for 4 months of service which would take place from October of 2016 through February of 2017. The revenue reported from this transaction during 2016 would bea. $0

b. $4,200
c. $5,600
d. $1,400

Answer 1

There is something wrong with this question because October to February is not four months, it's five months.

We can calculate this assuming 3 months of 2016 (October, November, December) and 2 months of 2016 (November and December).

• 3 months of 2016 = ($22,400 / 4 months) x 3 months = $16,800
• 2 months of 2016 = ($22,400 / 4 months) x 2 months = $11,200

No option is correct.