Argyle Designs has entered into a contract to design 10 new dresses for a customer.It will collect a total of $49,000 after the design services are complete.Argyle started design work on June 1.As of June 30,it finished 2 of the 10 designs.The company will make an adjusting entry at the end of June to accrue $12,250 of service revenue.

Question

Quizplus · Accepted Answer

The correct amount to accrue would be $9,800, not $12,250, because $49,000 divided by 10 designs equals $4,900 per design, and for 2 designs completed, the revenue should be $4,900 x 2 = $9,800.

Argyle Designs Has Entered into a Contract to Design 10