Question

On November 1, 2018, Taylor signed a one-year contract to provide handyman services on an as-needed basis to King Associates, with the contract to start immediately. King agreed to pay Taylor $4,800 for the one-year period. Taylor is confident that King will pay that amount, but payment is not scheduled to occur until 2019. Taylor should recognize revenue in 2018 in the amount ofa.$0b.$800c.$2,400d.$4,800

Answer 1

Answer:

option (b) $800

Explanation:

Data provided in the question:

Amount to be received = $4,800

Duration = 1 year

Date on which the contract was signed =  November 1, 2018

Now,

For the year 2018, the number of months left are 2

therefore,

Revenue to be recognized in 2018

= [Amount to be received ÷ Duration in months ] × Months left in 2018

= [ $4,800 ÷ 12 ] × 2

= $800

Hence,

The correct answer is option (b) $800