Revenue Recognition for June
On June 30, your company processes revenue recognition. The workfile contains a new transaction for 402.50. The system uses this calculation for the workfile transaction:
350.00 cost × 15 percent markup = 52.50
350.00 cost + 52.50 = 402.50
The system creates this journal entry for revenue recognition for the accrued revenue and accrued accounts receivable:
G/L Date |
Account |
Debit |
Credit |
|---|---|---|---|
June 30, 2005 |
Accrued accounts receivable |
402.50 |
|
June 30, 2005 |
Accrued revenue |
(402.50) |
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 4831 directs the system to the base rules for the accrued revenue account.
It creates this credit journal entry for the revenue recognition amount.