Ask Me Help Desk

Ask Me Help Desk (https://www.askmehelpdesk.com/forum.php)
-   Finance & Accounting (https://www.askmehelpdesk.com/forumdisplay.php?f=411)
-   -   Account for unearned income. (https://www.askmehelpdesk.com/showthread.php?t=552060)

  • Feb 6, 2011, 10:04 PM
    branjo24
    Account for unearned income.
    The TJ Company collects all service revenue in advance. The company showed a $12,500 liability on its December 31, 2011 balance sheet for unearned service. During 2012, customers paid $50,000 for future services, and the income statement for the year ended December 31, 2012 reported service revenue of $52,700.

    What amount for the liability unearned service revenue will appear on the balance sheet at December 31, 2012? Can you please explain to me how to reach the correct answer?
  • Feb 8, 2011, 12:51 PM
    pready

    Since the customers pay for all services in advance you need to add the $50,000 from the customers to the liability acount.

    Now to calculate the ending liability amount you need to take the number calculated above and subract the service revenue.
  • Feb 8, 2011, 01:44 PM
    branjo24
    Comment on pready's post
    Thank you very much! This makes sense to me now, I was making it a lot harder than I should have.
  • Feb 8, 2011, 02:35 PM
    pready

    I also had the same problem when I first started studying accounting, so I totally understand .

  • All times are GMT -7. The time now is 09:22 AM.