On April 30, 2019 the Triple Safety Agency received an advance payment ofP540,000 for a one-year security contract covering the period June 01 to May 31,2020. The Company is using the calendar year reporting period.How much is the service income to be reported on December 31, 2019?

Service income should be recognized as revenue when it is earned. Any advance received against which…

Answered: On April 30, 2019 the Triple Safety…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

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In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.

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On April 30, 2019 the Triple Safety Agency received an advance payment of P540,000 for a one-year security contract covering the period June 01 to May 31, 2020. The Company is using the calendar year reporting period. How much is the service income to be reported on December 31, 2019?