91Ó°ÊÓ

The term revenue recognition refers to the conditions in which revenue is acknowledged. Revenue recognition is GAAP’s principle that specifies and accounts for the criteria under which revenue is recognized. When a major event occurs, revenue is frequently recorded, and monetary amount for the organization may be easily determined.

None is recognized in January since none is utilized in January that means,

Income in January is $0.

As Telephone Sellers got paid $4,000 and had to pay TeleExpress $3,000, So, the net income is just $1,000

$\begin{array}{rcl}\mathrm{Net}\mathrm{income}& =& \mathrm{Amount}\mathrm{telephone}\mathrm{sellers}\mathrm{get}-\mathrm{Amount}\mathrm{paid}\mathrm{to}\mathrm{TeleExpress}\\ & =& \$4,000-\$3,000\\ & =& \$1,000\end{array}$

Amount paid based on usage in February = 50%

$\begin{array}{rcl}\mathrm{Income}\mathrm{in}\mathrm{February}& =& \mathrm{Net}\mathrm{income}×\mathrm{Amount}\mathrm{paid}\mathrm{based}\mathrm{on}\mathrm{usage}\mathrm{in}\mathrm{February}\\ & =& \$1,000×50\%\\ & =& \$500\end{array}$

Amount paid based on usage in March = 30%

$\begin{array}{rcl}\mathrm{Income}\mathrm{in}\mathrm{March}& =& \mathrm{Net}\mathrm{income}×\mathrm{Amount}\mathrm{paid}\mathrm{based}\mathrm{on}\mathrm{usage}\mathrm{in}\mathrm{March}\\ & =& \$1,000×30\%\\ & =& \$300\end{array}$

Amount paid based on usage in April = 20%

$\begin{array}{rcl}\mathrm{Income}\mathrm{in}\mathrm{April}& =& \mathrm{Net}\mathrm{income}×\mathrm{Amount}\mathrm{paid}\mathrm{based}\mathrm{on}\mathrm{usage}\mathrm{in}\mathrm{April}\\ & =& \$1,000×20\%\\ & =& \$200\end{array}$