On September 1, Year 1, Zelda Company collected $120,000 cash for services to be provided for one year beginning immediately. The company's fiscal year ends on December 31. Based on this information, the amount of revenue appearing on the Year 1 income statement would be

Question

Quizplus · Accepted Answer

The revenue for Year 1 is recognized for the period from September 1 to December 31, which is 4 months. The monthly revenue is $120,000 / 12 = $10,000. Therefore, for 4 months, the revenue is $10,000 x 4 = $40,000.

On September 1, Year 1, Zelda Company Collected $120,000 Cash