Revenue Recognition for July
On July 31, your company processes revenue recognition. The workfile contains a new transaction for 575.00. The system uses these calculations for the workfile transaction:
500.00 cost × 15 percent markup = 75.00
500.00 cost + 75.00 = 575.00
The system creates this journal entry for revenue recognition:
G/L Date |
Account |
Debit |
Credit |
|---|---|---|---|
July 31, 2005 |
Accrued Accounts Receivable |
575.00 |
|
July 31, 2005 |
Actual Revenue |
(575.00) |
This illustration shows the T-account postings in the general ledger:
The system uses these AAIs to direct the system to create the journal entries:
Billing AAI table number 4832 directs the system to the base rules for the accrued accounts receivable account.
It creates a debit journal entry for the revenue recognition amount.
Billing AAI table number 4811 directs the system to the base rules for the actual revenue account.
It creates a credit journal entry for the revenue recognition amount.