When would janine recognize income from the advance payment

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Reference no: EM13906280

In October of year 0, Janine received a $6,000 payment from a client for 25 months of security services she will provide starting on November 1 of year 0. This amounts to $240 per month.

a) When must Janine recognize the income from the $6,000 advance payment for services if she uses the cash method of accounting?

b) When must Janine recognize the income from the $6,000 advance payment for services if she uses the accrual method of accounting?

c) Suppose that instead of services, Janine received the payment for a security system (inventory) that she will deliver and install in year 2. When would Janine recognize the income from the advance payment for inventory sale if she uses the accrual method of accounting and she uses the deferral method for reporting income from advance payments? For financial accounting purposes, she reports the income when the inventory is delivered.

d) Suppose that instead of services, Janine received the payment for the delivery of inventory to be delivered next year. When would Janine recognize the income from the advance payment for sale of goods if she uses the accrual method of accounting and she uses the full-inclusion method for advance payments?

Reference no: EM13906280

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