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Accrual Based Accounting: Deferred (unearned) revenues. Suppose that on March 11 th , 2017 a customer pays Not So Strong, Ltd. $800 in cash in
- Accrual Based Accounting: Deferred (unearned) revenues. Suppose that on March 11th, 2017 a customer pays Not So Strong, Ltd. $800 in cash in advance for 8 personal training sessions (valued at $100 each). 3 of these sessions were provided to the customer in March and the remaining 5 sessions were provided to the customer in April. Assume that Not So Strong has a monthly accounting period and that all adjustments and adjusting entries are made only at the end of each month (i.e. no adjusting entry for revenue has been made yet).
- Record the original journal entry Not So Strong, Ltd. would make on March 11th, 2017 upon receipt of cash from the customer.
- Record the adjusting entry Not So Strong, Ltd. should record on March 31st to recognize service revenue from services provided in March.
- Using accrual basis accounting, how much revenue would Not So Strong recognize in March? In April? Assume there were no other transactions.
- If Not So Strong, Lt instead had used cash basis accounting, how much revenue would they recognize in March? In April? Assume there were no other transactions.
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