kline corp. recognizes revenue over time to account for long-term contracts. the contract price is $5 million, total construction costs are $3.75 million, actual costs incurred during the first year are $1.5 million, and the revenue recognized is $2 million. the journal entry to record revenue during year 1 is: (select all that apply.)

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04-11-2022
Business

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kline corp. recognizes revenue over time to account for long-term contracts. the contract price is $5 million, total construction costs are $3.75 million, actual costs incurred during the first year are $1.5 million, and the revenue recognized is $2 million. the journal entry to record revenue during year 1 is: (select all that apply.)

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tutorconsortium117 tutorconsortium117 · Answer 1 · 2022-11-08T00:44:23-05:00

As the company recording the revenue, so the revenue account is credited. It involves the cost of construction which is debited and the contract price account is debited.

The journal entry which is to be recorded is shown below

Dr. $500,000 for the contract fee

$1.5 million was spent on construction.

$2 million in revenue

What are some examples of revenue accounts?

Sales, service revenues, earned fees, interest revenue, and interest income are a few examples of revenue accounts. Revenue accounts typically contain credit balances because they are credited when services are rendered and billed. The money your company makes from commercially linked activity is known as revenue or sales. Sales typically account for the majority of an organization's income. Your business's income statement's first line will show your revenue. Revenue is reported on the income statement rather than the balance sheet alongside other assets for accounting purposes. Revenue is used to finance the acquisition of new assets, settle debt, and provide dividends to stockholders. Thus, revenue in and of itself is not an asset.

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