Walton Company collected $9,600 in May of 2013 for 4 months of service which would take place from October of 2013 through January of 2014. The revenue reported from this transaction during 2013 would be:
A) $0.
B) $7,200.
C) $9,600.
D) $2,400.

Question

Quizplus · Accepted Answer

The revenue should be recognized over the period of service, which is from October 2013 to January 2014. Since the service has not yet been performed in 2013, no revenue should be recognized in 2013. Therefore, the correct answer is B) $7,200, which represents 3 months of service (October, November, and December) in 2013.

Walton Company Collected $9,600 in May of 2013 for 4