"I don't believe my company records unearned income in their balance sheet. We are a retail company, and, although we have layaway, most of our sales are immediate cash for product transactions. Layaways are still counted as part of our inventory until they are paid in full. So, again, I would think my company does not record unearned income in their balance sheets."
Do you think layaways are recorded as unearned revenue? Why or why not?
The problem states that most sales are cash. The entry for that kind of activity would be:
In a layaway, a customer pays some money in cash, but there is no sale because the full price wasn't paid, the goods were not transferred and ...
The solution defines revenue and unearned revenue, followed by a description of the nature of the layaway transaction. Sample entries are provided.