A customer paid $54000 to Concord Marketing on December 30, 2020, to perform services from January 1, 2021 through December 31, 2024. If Concord fails to record the revenue that should be recognized, would be understated by each year.

Net income, $13,500

Explanation:

When an amount is received in advance for service yet to be rendered, revenue is not recognized until it is earned. The total amount paid is to be earned over 4 years. As such, the amount to be earned yearly

= $54,000/4

= $13,500

If this amount is not recorded yearly by crediting revenue and debiting deferred or unearned revenue, the net income will be understated by $13,500 each year.

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