Justice Company and League Company equally share the output of their joint operation. The joint operation paid a service fee of $60 000 to Justice Company during the current period. The cost incurred by Justice Company to supply the service was $48 000. Justice Company records the service fee revenue as:
A) DR Cash $60 000 CR Fee revenue $60 000
B) DR Cash $48 000 CR Fee revenue $48 000
C) DR Cash $30 000 CR Fee revenue $30 000
D) DR Cash $24 000 CR Fee revenue $24 000

Question

Quizplus · Accepted Answer

Justice Company would record the full amount of the service fee received ($60,000) as revenue, reflecting the total cash received for the service provided. The cost to supply the service ($48,000) would be recorded separately as an expense, not affecting the revenue recognition.

Justice Company and League Company Equally Share the Output of Their