On September 1, Year 1, Gomez Company collected $9,000 in advance from a customer for services to be provided over a one-year pe

Question

4 years ago

13

On September 1, Year 1, Gomez Company collected $9,000 in advance from a customer for services to be provided over a one-year pe

riod beginning on that date. How much revenue would Gomez Company report related to this contract on its income statement for the year ended December 31, Year 1How much would it report as cash flows from operating activities for one year?a. $3,000; $3,000
b. $3,000; $9,000
c. $0; $9,000
d. $9,000; $9,000

Business

1 answer:

Margaret [11] · Answer 1 · 2022-01-18T08:07:41+03:00

Answer:

d. $9,000; $9,000

Explanation:

As cash received on January 1 in advance to provide service in one year which is completed on December 31. So all the Unearned revenue is recognized because service for 12 month has been performed so whole amount will be reported in Income statement for the year ended December 31. Only cash received is from the service revenue activity so, it is also reported as $9,000. correct option is d. $9,000; $9,000.