Question

The following transactions occurred during November: Borrowed $2,700 from the bank in and signed a promissory note. Received $525 from a customer in as payment for services performed during October. Received $1,375 from a customer for services to be performed during December. Billed $3,950 to customers for services performed on account in November. Received $5,900 cash from the issuance of common stock to owners. Received $1,050 cash for services performed during November. What is the amount of revenue that will be reported on the income statement for the month ended November 30

Answer 1

Answer: $5,000

Explanation:

Going by the Accrual principle in accounting, revenue is only to be recognized when earned. This means that revenue from services performed in October and revenue from services to be performed in December, will not be part of revenue reported in November.

Revenue to be recorded in November income statement = Billed $3,950 to customers for services performed on account in November + Received $1,050 cash for services performed during November

= 3,950 + 1,050

= $5,000