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CleanEnergy Solutions is analyzing its revenue recognition practices for the year ending December 31, 20X1. The company had the following transactions: January 1: Signed a
CleanEnergy Solutions is analyzing its revenue recognition practices for the year ending December 31, 20X1. The company had the following transactions:
- January 1: Signed a contract to provide solar installation services for $500,000, with payment terms of 50% upfront and the remaining 50% upon completion in six months.
- April 1: Completed 60% of the project and received the final payment for the completed portion.
- June 30: Completed the remaining 40% of the project and recognized the remaining revenue.
- December 31: Billed $100,000 for maintenance services provided in December but not yet collected.
Required:
- Prepare the journal entries for the revenue transactions during the year.
- Calculate the total revenue recognized for the year ending December 31, 20X1.
- Prepare the accounts receivable and unearned revenue balances as of December 31, 20X1.
- Discuss the impact of the revenue recognition on the company’s financial statements and cash flow.
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