On October 15, a company received $15,000 cash as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31, 10% of the services required by the contract were completed. The company will record consulting revenue of $1,500 from this contract for October.

Question

Quizplus · Accepted Answer

The amount of $1,500 represents 10% of the total contract value ($15,000), which means that it is the portion of the revenue that can be recognized in October based on the percentage of services completed. Therefore, the company will record consulting revenue of $1,500 in October and reduce the balance of its Unearned Consulting Revenue account accordingly.

On October 15, a Company Received $15,000 Cash as a Down