Question

The following account balances are taken from the December 31, 2018, financial statements of ABZ Advertising Company. The company uses accrual basis accounting. Advertising Revenue $ 50,034 Cash 44,530 Accounts Receivable 7,635 Interest Expense 2,369 Accounts Payable 5,150 Operating Expenses 40,528 Deferred Revenue 1,266 Equipment 19,513 Income Tax Expense 2,502 The following activities occurred in 2019: Performed advertising services on account, $59,200. Received cash payments on account, $11,300. Received deposits from customers for advertising services to be performed in 2020, $3,100. Made payments to suppliers on account, $5,150. Incurred $48,450 of operating expenses; $42,000 was paid in cash and $6,450 was on account and unpaid as of the end of the year. What is the amount of revenue that will be reported on the income statement for the year ended December 31, 2019

Answer 1

$59,200

Step-by-step explanation:

Since the accrual basis of accounting is used, revenue will be recorded when incurred not as when paid during the Reporting Period.

So, we need to select the items of revenue incurred specifically for 2019 (Reporting Period) and add them up observing the above rule.

Conclusion :

The only item related to Revenue in 2019 is Services Performed on Account of $59,200.

Thus, this is the amount of revenue that will be reported on the income statement for the year.