Mr. A has the following revenue transactions during April of the current year: Rendered services: Cash, P5, 000 & on credit, P3, 500; received P5000 advance payment for services to be rendered in May. The amount of income to be recognized in April isSelect one:a.P10,000b.P13,500c.P5,000d.P8,500
Question
Mr. A has the following revenue transactions during April of the current year: Rendered services: Cash, P5, 000 & on credit, P3, 500; received P5000 advance payment for services to be rendered in May. The amount of income to be recognized in April isSelect one:a.P10,000b.P13,500c.P5,000d.P8,500
Solution
The income to be recognized in April is the sum of the cash received for services rendered in April and the credit. The advance payment for services to be rendered in May is not included because it is not earned in April.
Here's how to calculate it:
- Cash received for services rendered in April: P5,000
- Services rendered on credit in April: P3,500
Add these two amounts together:
P5,000 (cash) + P3,500 (credit) = P8,500
So, the amount of income to be recognized in April is P8,500. Therefore, the correct answer is d. P8,500.
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