Sparkling Pools performed $2,400 of pool maintenance services during July;the customers had paid in advance for these services in June.The company performed $1,500 of pool maintenance services during July and collected payment from those customers in August.Also,during July,the company accepted an order to perform $750 of pool maintenance services in August;the customers will pay for these services in August.The company uses accrual basis accounting.The Service Revenue account should be credited for:
A)$2,400 in June,$1,500 in July,and $750 in August.
B)$2,400 in June,$0 in July,and $2,250 in August.
C)$0 in June,$2,400 in July,and $2,250 in August.
D)$0 in June,$3,900 in July,and $750 in August.

Question

Quizplus · Accepted Answer

The requirement under accrual basis accounting is to record revenues when the performance obligation is satisfied.This means the company has done what it promised to do.No services were performed during June and,as a result,no revenue is recorded in that month.Services totaling $3,900 (or $1,500 + $2,400)would be credited to the Service Revenue account in July and $750 would be credited to the Service Revenue account in August.

Sparkling Pools Performed $2,400 of Pool Maintenance Services During July;the