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I’m looking for some guidance on how to think through the following real world scenario I have. Thanks in advance.
I have a contract with company ABC to provide me services, and in consideration I agreed to pay $1000. Company ABC has provided the services in full. My entry is:
Dr. COS $1,000
Cr. Accounts Payable $1,000
As of today, I have paid $400. For the remaining $600, I have agreed with company ABC that I do not need to pay them $600 and will instead provide them my business’ marketing services over the next year worth $600 based on the rate card we use to charge regular customers of the business.
Is this as simple as:
Dr. Accounts Payable $600
Cr. COS $600
Are there other P/L entries or liabilities that need to be recorded? Would the $600 be recorded as revenue?
I have a contract with company ABC to provide me services, and in consideration I agreed to pay $1000. Company ABC has provided the services in full. My entry is:
Dr. COS $1,000
Cr. Accounts Payable $1,000
As of today, I have paid $400. For the remaining $600, I have agreed with company ABC that I do not need to pay them $600 and will instead provide them my business’ marketing services over the next year worth $600 based on the rate card we use to charge regular customers of the business.
Is this as simple as:
Dr. Accounts Payable $600
Cr. COS $600
Are there other P/L entries or liabilities that need to be recorded? Would the $600 be recorded as revenue?