Answer:
The amount of service revenue should be recorded for the year ending December 31, 2016: $2,250
Explanation:
Allen Company performs services from beginning on July 1, 2016.
Following the Accrual accounting - an accounting method that revenue or expenses are recorded when a transaction occurs rather than when payment is received or made.
Allen will earn $4,500 annually and receive payment on June 30, 2017. For the year ending December 31, 2016, Allen Company has performed services for 6 months.
The amount of service revenue = ($4,500/12)x6 = $2,250
The entry will be:
Debit Accounts Receivable $2,250
Credit Service revenue $2,250
