ACCOUNTING-Midwest Advertising Agency handles advertising for clients

Midwest Advertising Agency handles advertising for clients under contracts that require the agency to develop advertising copy and layouts, as well as place advertisements in various media. The agency typically charges clients a commission of 15% of the media cost. The agency makes advance billings to its clients of the estimated media cost plus its 15% commission. Adjustments to these advances usually are small.Frequently, both the billings and receipt of cash from these billings occur before the period in which the advertising actually appears in the media. A conference meeting is held between officers of the agency and the new firm of Certified Public Accountants (CPAs) recently engaged to perform annual audits. In this meeting, consideration is given to four possible points for measuring revenue:At the time the advanced billing is madeWhen payment is received from the clientIn the month when the advertising appears in the mediaWhen the bill for advertising is received from the media, generally in the month following its appearanceThe agency has been following the first method for the past several years, on the basis that a definite contract exists and the revenue is earned when billed. When the billing is made, an entry is prepared to record the estimated receivable and liability to the media. Estimated expenses related to the contract are also recorded. Adjusting entries are made later for any differences between the estimated and actual amounts.As a member of the CPA firm attending this meeting, how would you react to the agency’s method of recognizing revenue? Discuss the strengths and weaknesses of each of the four methods of revenue recognition and indicate which one you would recommend the agency follow. Explain the reasons for your choice.

 

CLICK HERE TO ORDER A SIMILAR PAPER

We pride ourselves in writing quality essays

CLICK HERE TO CONTACT US

Lets Start Working

Plagiarism Free

We use anti-plagiarism software to ensure you get high-quality, unique papers. Besides, our writers have a zero plagiarism mentality

On Time Delivery

Your essay will be delivered strictly within the deadline.  If you have an urgent order, we can do it!

Money Back Guarantee

We offer warranty service, including free revisions, and a right to request a refund incase your expectations are not met!

THE BEST PAPER WRITER HELPER

Our Advantage

  • Say “NO” to plagiarism – FREE plagiarism report as an addition to your paper
  • The lowest prices that fit excellent quality
  • Authorship – you are the one who possesses the paper. We DO NOT re-sale or re-use any of them.

OUR PAPER WRITER HELPER GOODIES

Our Freebies

  • Free Cover Page
  • Free Revisions
  • Free Reference Page
  • Free 24/7 support

Pin It on Pinterest

Share This