05-06-2010, 08:16 PM
Dear in given scenario,
1st Jan is not a due date for recognizing 3,000 as income as the institute has received the amount on 1st Jan without providing any services, so on 1st Jan if fee is received should be treated as a fee received in advance which is a liability for the institute, at the end of each month 1,000 will be transfered to income thus reducing the liability by the same amount, at the end of March there will be no outstanding liability and total income for the quarter will be three thousand.
If a student pays 4,000 on 1st Jan, its liabilty of the institute to provide him services up to end of the April and 1,000 will be transfered to income the end of each month. After April, an asset as receivable from student of 1,000 will be created at the end of each month and income will be increase by the same amount till the end of the year.
1st Jan is not a due date for recognizing 3,000 as income as the institute has received the amount on 1st Jan without providing any services, so on 1st Jan if fee is received should be treated as a fee received in advance which is a liability for the institute, at the end of each month 1,000 will be transfered to income thus reducing the liability by the same amount, at the end of March there will be no outstanding liability and total income for the quarter will be three thousand.
If a student pays 4,000 on 1st Jan, its liabilty of the institute to provide him services up to end of the April and 1,000 will be transfered to income the end of each month. After April, an asset as receivable from student of 1,000 will be created at the end of each month and income will be increase by the same amount till the end of the year.
