Question

Our company has signed a contract on June 15, 2016, to perform services beginning on June 16, 2016. We will earn $12,000 per month. We will receive payment for our services on July 15, 2016. What dollar amount fees earned should we record on our June 30, 2016 adjusting entry

Answer 1

The Service revenue should be recorded on June 30, 2016 adjusting entry is $6,000

Step-by-step explanation:

According to the given data Service revenue = $12,000 per month

Since services will begin from June 16, thus on June 30, service revenue should be recorded for half month only.

We would calculate the Half month service revenue as follows:

Half month service revenue = $12,000 x 1/2

Half month service revenue = $6,000

Therefore the Service revenue should be recorded on June 30, 2016 adjusting entry = $6,000