Total service hours : 7000+3000 =10000
Of the service hours 7000/10000 = 70 % of contract is completed by 2018
Total revenue to be recognised in 2018 : 100000*70% = 70000
entry:
Account | Debit | credit |
Accounts receivable [asset increase ] | 50000 | |
Unearned service revenue [liability decrease] | 20000 | |
Service revenue [stockholders equity increase ] | 70000 |
correct option is B"- Assets: Increase Liabilities: Decrease SE: Increase NI: Increase
**service revenue will increase net income which is a part of stockholders equity.
Get Answers For Free
Most questions answered within 1 hours.