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 closing date is December 31.Based on this information,the amount of revenue appearing on the Year 1 income statement would be

Question

Quizplus · Accepted Answer

Revenue earned per month = $120,000 total ÷ 12 months = $10,000 per month
As of December 31, Year 1:
Amount earned = $10,000 per month × 4 months = $40,000 service revenue
Future obligation = $10,000 per month × 8 months = $80,000 unearned revenue

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