Licensing Fees: Spreadsheets Made Easy (SME) is a company that designs and sells spreadsheet software. Corporate customers purchase licences for the number of users in their company that can access the software from their network at any point in time. The licences are granted for two years at which time the licence expires and can no longer be used by the customer. On 1 November 20X1, SME sold 50 licences to a customer for a total consideration of $60,000. SME has a February year-end.
Required:
Prepare the journal entries that would be recorded by SME related to this transaction for its February 20X2 year-end.