Question

Expert Lawn Services offers customers a reduced price for lawn care if they pay for 6 months service in advance. In March 2020, 50 customers prepay $540 each for services to be provided from April through September. Expert recognizes revenue proportionately over the 6-month period. What is Expert's unearned revenue liability as of April 30

Answer 1

Answer:

the total unearned revenue be $22,500.

Explanation:

The computation of the unearned revenue liability is given below:

advance paid 540.00

Divided by tenure of services months 6.00

revenue to be recognized per month 90.00

Now unearned revenue for 30 april i.e. for five months 450.00

Multiply by no of customers 50.00

So, the total unearned revenue be $22,500.

Answer 2

Unearned Revenue liability refers to the amount received in advance for the services or product that has yet to be provided to the customers. The unearned revenue liability is $22,500.

What is revenue?

Revenue refers to the inflows of cash in a company by operating normal business activities. Net income is calculated by deducting costs from the revenues.  

The expert's unearned revenue liability is calculated as follows:

$\begin{aligned}\text{Total revenue}&= \text{No. of customer }\times\text{ amount paid by each customer}\\&=50 \times \ 540\\&=\ 27,000\end{aligned}$

       

Revenue for the month of April is $27,000 divided by 6 months= $4,500

Unearned revenue liability is

$\begin{aligned}\text{Unearned revenue liability}&= \text{Total Revenues }-\text{ Revenue earned for april}\\&=\ 27,000 - \ 4,500\\&=\ 22,500\end{aligned}$

Therefore, the unearned revenue liability is $22,500.

Learn more about Revenue here:

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