Ask Question
11 February, 00:22

On December 1, Year 1, Jack's Snow Removal Company received $12,000 of cash in advance from a customer and promised to provide services for that customer during the months of December, January, and February. How will the Year 1 year-end adjustment to recognize the partial expiration of the contract impact the elements of the financial statements model?

+4
Answers (1)
  1. 11 February, 03:09
    0
    The answer is: equity will increase by $4,000

    Explanation:

    Since only one third of the contract has been fulfilled, then one third of the money received ($12,000 x 1/3) should be recognized as revenue. A revenue increase will result in a net earnings increase, which will result in an adjustment of the balance sheet's equity.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On December 1, Year 1, Jack's Snow Removal Company received $12,000 of cash in advance from a customer and promised to provide services for ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers