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 these journal entries for revenue recognition:
G/L Date |
Account |
Debit |
Credit |
|---|---|---|---|
June 30, 2005 |
Accrued Accounts Receivable |
402.50 |
|
June 30, 2005 |
Actual 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 4811 directs the system to the base rules for the actual revenue account.
It creates a credit journal entry for the revenue recognition amount.