On February 1,Year 1,Cora Company collected $60,000 cash for consulting 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 unearned revenue appearing on the December 31,Year 2 balance sheet would be

Question

Quizplus · Accepted Answer

Revenue earned per month = $60,000 total ÷ 12 months = $5,000 per month
As of December 31, Year 1:
Amount earned = $5,000 per month × 11 months = $55,000 service revenue
Future obligation = $5,000 per month × 1 month = $5,000 unearned revenue
As of December 31, Year 2:
Amount earned = $5,000 per month × 1 months = $5,000 service revenue
All of the revenue has been earned by the end of Year 2 so the amount of unearned revenue is zero on December 31, Year 2.

On February 1,Year 1,Cora Company Collected $60,000 Cash for Consulting