Question

On April 1, Katie Inc. collected $2,400 from a customer for a 12-month membership starting on that date. On December 31, Katie Inc. should credit:

Answer 1

On December 31, Katie Inc. should credit Membership Revenue with $1,800.

What is Deferred Revenue?

Deferred revenue is recorded as a liability in Katie Inc.'s balance sheet because it represents a prepayment by its customer for membership services that are yet to be delivered.  By December 31, Katie would have earned 9 months out of the 12 months subscription.

Data Analysis:

April 1, Cash $2,400 Deferred Revenue $2,400

December 31 Deferred Revenue $1,800 Membership Revenue $1,800 ($2,400 x 9/12).

Thus, Katie Inc. should credit its Membership Revenue account on December 31 with $1,800.

Learn more about deferred revenue at brainly.com/question/24852569