Bayside Technical Services Signed a Contract on a Six-Month Job

question 33

Multiple Choice

Bayside Technical Services signed a contract on a six-month job for a client, starting on March 1. Bayside will collect $24,000 from its customer when the job is finished but the revenue is earned evenly over the six months. On March 31, before adjusting entries are made, Bayside's Accounts Receivable account had a debit balance of $4,000. After the March 31 monthly adjusting entry has been made, what will be the balance in Accounts Receivable?

• A) Debit balance of $4,000
• B) Credit balance of $20,000
• C) Debit balance of $8,000
• D) Debit balance of $24,000

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Definitions:

FOB Shipping Point

A term indicating that the buyer takes ownership and responsibility for goods at the point of departure from the seller's shipping dock.

Freight-Out

Refers to the cost associated with shipping goods to customers, a part of the selling expenses in accounting.

Periodic Inventory System

An inventory system that records inventory levels and the cost of goods sold at specific intervals, rather than continuously.

FOB Shipping Point

A delivery term indicating that the buyer assumes responsibility for the goods and the risk of damage at the moment the goods leave the seller's premises.