Howie, Price, and Liu operate an accounting firm. In March, their staff worked a total of...
Howie, Price, and Liu operate an accounting firm. In March, their staff worked a total of 1,850 hours at an average billing rate of $320 per hour. They sent bills to clients in the month of March that totalled $492,000. They expect to bill the balance of their time in April. The firm's salary costs total $177,600 each month. How much revenue should the firm recognize in the month of March assuming the firm uses the earnings approach to revenue recognition? How much salaries expense should it recognize?
Revenue: ?
Salaries expense: ?
Homework Answers
Answer:
| Revenue | $592,000 |
| Salaries expense | $177,600 |
Calculations:
As per revenue recognition, Revenues and expenses are recognized in the period when it is incurred.
Revenue should be recognized in the month of March is equal to Number of hours worked multiplied with average billing rate per hour. Therefore, Revenue = 1,850 hours x $320 per hour = $592,000
Salaries expense is equal to Monthly salary's cost. Therefore, Salaries expense = $177,600
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