Question

Question :Momentous Occasions is a photography business that shoots videos at college parties. The freshman class pays \(1,000 in advance on March 3 to guarantee services for its party to be held on April 2. The sophomore class promises a minimum of \)2,800 for filming its formal dance and actually pays cash of \(4,100 on February 28 at the dance. Answer the following questions about the correct way to account for revenue under the accrual basis: a. Considering the \)1,000 paid by the freshman class, on what date was revenue recognized? Did the recognition occur on the same date cash was received? b. Considering the $4,100 paid by the sophomore class, on what date was revenue recognized? Did the recognition occur on the same date cash was received?

Short answer

Revenue will be recognized on April 2. Revenue is not recognized on same date.

Step-by-step solution

Step-by-Step-SolutionStep1: Explanation on Revenue Recognition

Step2: Revenue Recognition in Case offreshman class

Revenue Recognition in Case of freshman class

In case of freshman class, advance received will be recorded as unearned revenue in the account. And when the service is provided on April 2, the revenue will be recorded in the books of accounts.