In 2009, a major drug company agreed to give a not-for-profit private college $1,700,000 to perform testing of a new drug. An advance payment of $700,000 was received in 2009. The college was to receive $4,000 per individual test. In 2009, the college completed 100 tests. How much revenue should the college report for 2009?

Question

Quizplus · Accepted Answer

The college received an advance payment of $700,000 in 2009. Therefore, the revenue for 2009 will be the total amount earned from completed tests minus the advance payment already received. The college completed 100 tests and was to be paid $4,000 per test, resulting in a total revenue of $400,000 for 2009 ($4,000 x 100 tests). So, the revenue to be reported for 2009 will be $400,000 (option B).

In 2009, a Major Drug Company Agreed to Give a Not-For-Profit