Perry's Painters took a $1,500 deposit from a customer when they signed the contract to paint the customer's residence.It took them three weeks to complete the job.On completion the customer paid the $3,500 balance.How should Perry's Painters recognize revenue for this job?
A)The $1,500 as revenue when it is received, and the $3,500 as revenue when it is received.
B)The $1,500 as unearned revenue and the $3,500 as revenue when it is received.
C)$1,667 a week during the painting period.
D)$5,000 as revenue at the completion of the project.

Question

Quizplus · Accepted Answer

Revenue recognition principles dictate that revenue should be recognized when the service is completed and the performance obligation is fulfilled. In this case, Perry's Painters completed the painting job, fulfilling their obligation, so the entire $5,000 (deposit plus balance) should be recognized as revenue upon completion.

Perry's Painters Took a $1,500 Deposit from a Customer When