MGMT 20000 Lecture Notes - Lecture 10: Deferred Income
23 Sep 2018
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Document Summary
A company receives cash in advance from customers. Cash received is initially recorded as a liability because there is an obligation to the customer. Cash received in advance from a customer for products or services to be provided in the future. By the end of the period, some services are provided. If cash is received in advance on dec. 23, and of service is provided, deferred revenue remains on dec. 31. Recording the usage of supplies inventory during the period. On july 1, 2018, a two-year insurance policy was purchased for ,000 with coverage to begin immediately. ,000/24 months=1250*6 (six months from july to december)=,500. In sept. 2017, building and trade magazine received cash of ,000 for annual magazine subscriptions and credited deferred revenue. The magazine will begin to be delivered in october of 2017. At dec. 31, 2017, building and trade should make the following adjustment.
