Bayside Technical Services signed a contract on a six-month job for a client,starting on March 1.Bayside will collect $24,000 from its customer when the job is finished but the revenue is earned evenly over the six months.On March 31,before adjusting entries are made,Bayside's Accounts Receivable account had a debit balance of $6,000.After the March 31 monthly adjusting entry has been made,what will be the balance in Accounts Receivable?
A) Debit balance of $4,000
B) Credit balance of $20,000
C) Debit balance of $10,000
D) Debit balance of $24,000

Question

Quizplus · Accepted Answer

Since the revenue is earned evenly over the six months, the company will earn $4,000 of revenue each month. Therefore, after the March 31 adjusting entry has been made, the Accounts Receivable balance will be $10,000 (debit balance of $6,000 + $4,000 earned revenue for March).

Bayside Technical Services Signed a Contract on a Six-Month Job