Yummy food received an advance payment of OMR 1,000 for the order to be delivered after...

Yummy food received an advance payment of OMR 1,000 for the order to be delivered after two months. Write a short note on unearned income/ income received in advance with a literature review and by providing examples.?

Expert Solution

Unearned income is the income which is received by the firm in advance without completing the duties related to the payment. The income received is considered as earned only when the fiduciary duties related to the income has been completed but if the income received without fulfilling duties related to it then it is called as unearned income.

For example, if the firm receives $5,000 rent of April 2020 on January 2020 then it is considered as unearned income for April 2020.

Similarly, Yummy food receives advance payment of OMR 1,000 for which it requires to fulfil its duty of delivering order after 2 months. Thus, considered as unearned income.

Unearned income should be treated as liability until the firm complete all its duties. The entry for receiving unearned income will be:

Cash A/c Dr. OMR 1,000

To Unearned income A/c Cr. OMR 1,000

(Being unearned income received)

When the income is earned after completing duties related to such income, then adjusting entry will be:

Unearned income A/c Dr. OMR 1,000

To Revenue A/c Cr. OMR 1,000

(Being adjustment made for unearned revenue received)

ekkarill92 answered 2 years ago

A customer’s order is delivered (received by the customer) on September 10, 2019. This order was...

A customer’s order is delivered (received by the customer) on September 10, 2019. This order was placed with the company on June 5, 2019, and received by the manufacturing department on June 20, 2019. Actual production on the order began on July 10, 2019, and was completed August 10, 2019. Based on this information, calculate the following for this order: (a) total customer-response time (CRT), (b) order receipt time, (c) manufacturing lead (cycle) time, (d) manufacturing wait time, (e) manufacturing...

Alpha received $1,000 cash from a customer as payment to satisfy an existing account receivable but...

Alpha received $1,000 cash from a customer as payment to satisfy an existing account receivable but erroneously recorded it as a cash sale.

Summarize the steps a claim must go through in order to be processed and payment received.

Franklin Sports received a special order for 1,000 units of its bicycles at a selling price...

Franklin Sports received a special order for 1,000 units of its bicycles at a selling price of $250 per bike. Franklin has enough extra capacity to accept the order. No additional selling costs will be incurred. Unit costs to make and sell this product are as follows: direct materials, $100; direct labor, $70; variable manufacturing overhead, $10; fixed manufacturing overhead, $15, and variable selling costs, $3. A special machine would have to be purchased for $5,000 to fulfill this order....

Suppose you are offered a $1,000 payment each year until you die. After that, your children...

Suppose you are offered a $1,000 payment each year until you die. After that, your children will inherit the payment. Then their children. Forever. (And you love your progeny as much as you love yourself.) The payment is guaranteed by the Bank of Japan, and you want a 4% return on your investment. What is the maximum price you should pay for this perpetuity? Select one: a. $10,000 b. $20,000 c. $25,000 d. $100,000

Bond Yield and After-Tax Cost of Debt A company's 7% coupon rate, semiannual payment, $1,000 par...

Bond Yield and After-Tax Cost of Debt A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $676.72. The company's federal-plus-state tax rate is 40%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places. %

Wisconsin Electronics has received an order for 1,000 specially designed TV/VCR combinations. The following standards were...

Wisconsin Electronics has received an order for 1,000 specially designed TV/VCR combinations. The following standards were compiled for this order: Direct materials: Part #123 $25 per TV/VCR Part #456 $50 per TV/VCR Direct labor: 2.0 hours per TV/VCR at $15 per hour Manufacturing overhead: $40 per direct labor hour Assume the company adds a 10% markup to arrive at a selling price. The bid price for this order totals: A. $203,500. B. $115,500. C. $185,000. D. $80,000.

You buy a 6% coupon $1,000 par T-bond 59 days after the last coupon payment. Settlement...

You buy a 6% coupon $1,000 par T-bond 59 days after the last coupon payment. Settlement occurs in two days. You become the owner 61 days after the last coupon payment (59+2), and there are 121 days remaining until the next coupon payment. The bond’s clean price quote is 120:19. What is the full or dirty price (sometimes called the invoice price)?

Question