Question

Jones Distributors had the following revenue-related transaction during December: Collected cash for services provided in November, $24,000 Provided services on account, $49,000, of which Jones collected $28,000 Received $4,000 on December 1 for services to be provided evenly in December and January. According to the revenue recognition principle, how much revenue should Jones record for December?

Answer 1

Answer: $51,000

Explanation:

Jones Distributors following the Revenue recognition principle means that they will only recognize revenue when they have earned it i.e, when they have provided the services for which they were paid to do.

They provided services on account for $49,000 in December

They received $4,000 to provide services evenly in December and January which means that half was done in December so;

= 4,000/2

= $2,000

Total revenue in December = 49,000 + 2,000

= $51,000