Question

In: Accounting

On September 1, 2020, Betty DeRose, Inc. received $45,000 cash from a customer as payment for...

On September 1, 2020, Betty DeRose, Inc. received $45,000 cash from a customer as payment for services to be performed over the next 24 months. Betty DeRose, Inc. received $45,000 cash from another customer on May 31, 2021 as payment for services to be performed over the next 18 months. Calculate the total amount of unearned revenue that would appear in Betty DeRose, Inc's December 31, 2021 balance sheet.

Solutions

Expert Solution

  • All working forms part of the answer
  • The amount of Unearned revenue that would be disclosed on Dec 31, 2021 Balance Sheet = $ 42,500
  • The same is calculated below:

No.

Amount

Received on

No. of months concerned

Revenue to be earned per month

No. of months till 31 Dec, 2021

Amount of revenue earned till 31 Dec 2021

Amount of Unearned Revenue on Dec 31, 2021

[A]

[B]

[C]

[D = A/C]

[E]

[F = D x E]

[G = A - F]

1

$                                                      45,000.00

01-Sep-20

24

$                                        1,875.00

16 [4 months in 2020 and 12 months of 2021]

$           30,000.00

$        15,000.00

2

$                                                      45,000.00

31-May-21

18

$                                        2,500.00

7 [June 2021 to Dec 2021]

$           17,500.00

$        27,500.00

Total Amount of Unearned revenue that would appear on 31 Dec, 2021 Balance Sheet

$        42,500.00 = ANSWER

ekkarill92 answered 1 year ago
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