Can Cash Basis Have Unearned Revenue?
Notice that the resulting balances of the accounts under the two methods are the same (Cash: $30,000; Service Income: $6,000; and Unearned Income: $24,000). On December 1, 2020, DRG Company collected from a tenant $60,000 as rental fee for three months starting December 1.
Which is the liability method of recording unearned revenue?
Liability Method of Recording Unearned Revenue. Under the liability method, a liability account is recorded when the amount is collected. The common accounts used are: Unearned Revenue, Deferred Income, Advances from Customers, etc.
Where does the 30, 000 cash go in a business?
The $30,000 cash was deposited in the new business account. Transaction analysis: The new corporation received $30,000 cash in exchange for ownership in common stock (10,000 shares at $3 each). We want to increase the asset Cash and increase the equity Common Stock. 1. Owner invested cash
