Question

During its first year of operations, White Company bills credit customers $15,100 for services rendered. During the year, White receives $10,500 from all customers, $2,500 of which is received from cash customers. Required: What amount of revenue should be shown on the income statement for the year

Answer 1

White Company should show $15,100 as revenue on the income statement, which represents the total amount billed to customers for services during the year.

Step-by-step explanation:

The revenue to be shown on the income statement for White Company should reflect the amount billed to customers for services rendered, regardless of when cash is received. Since White Company billed credit customers $15,100 for services, this is the amount that should be reported as revenue on the income statement for the year. The actual cash received, including from cash customers, is relevant to the cash flow statement but does not alter the revenue figure on the income statement.

Answer 2

Total revenue = $17,600

Step-by-step explanation:

Given:

Bills credit to customers during the year = $15,100

Receive amount from customer = $10,500

Amount received in cash = $2,500

Total revenue during the year =?

Computation of total revenue during the year:

According to the accrual basis of accounting, total revenue includes the sum of credit and cash sales.

Total revenue = Cash sales + Credit sales

Total revenue = $2,500 + $15,100

Total revenue = $17,600