Maneet Kaur In: Category - Journal EntriesWhat is the journal entry for unbilled revenue?journal entryunbilled revenue ShareFacebook1 AnswerVotedRecent Vaishnavi_Shetty 2020-08-26T18:24:39+05:30Added an answer on August 26, 2020 at 6:24 pm Meaning of Unbilled RevenueUnbilled Revenue refers to the revenue earned by an entity by rendering the goods or services in the current period ie. sale has been recognized but the entity has not yet issued the corresponding invoices to the customer.Unbilled Revenue arise in situations where- a. Issue of invoice is delayed, or b. Invoice is issued only after the entire project/contract is completed.Unbilled Revenue is presented as a “current asset” in the balance sheet.Journal Entry for Unbilled Revenue1. Entry for recording the revenue as per the accrual methodUnbilled Revenue A/cDebitIncrease in asset To Revenue (Sales) A/cCreditIncrease in IncomeWe have debited Unbilled Revenue A/c because it is an asset for the supplier entity as the invoice will definitely be raised in the near future for the goods or services already rendered and the corresponding consideration is still receivable from the customer.We have credited the Revenue (Sales) A/c because the goods or services have been rendered by the entity. Therefore, as per accrual method it is recognized as revenue/sales by the seller entity in the current period itself.2. Entry when the invoice has been issued to the customerUnbilled Revenue is converted to Accounts Receivable once the invoice is issued.Accounts Receivable A/cDebitIncrease in asset To Unbilled Revenue A/cCreditReversal of unbilled revenue debited earlier as the invoice has now been issuedExamples of Unbilled RevenueExample 1 – Issue of invoice is delayedSoftware Ltd completed a software development & installation project worth 150,000 for ABC Ltd on 10th March 20×1. But it did not immediately issue an invoice. It issued the invoice on 05th April 20×1.Following journal entries will be passed in the books of Software Ltd-1. Entry for recording the revenue on completion of the project on 10/03/20×1Unbilled Revenue A/cDebit150,000 To Revenue (Sales) A/cCredit 150,0002. Entry at the time of issue of invoice on 05/04/20×1Accounts Receivable-ABC Ltd A/cDebit150,000 To Unbilled Revenue A/cCredit 150,000Example 2 – Invoice is issued only after the entire project/ contract is completedR&D Ltd entered into a contract for carrying out research & development activities for Chemical Ltd. They agreed upon a contract price of 10 million which will be entirely invoiced at the end of the project. Out of 10 million, 3 million is related to research phase and 7 million for development phase.Research activities were completed in January 20×1 and development activities in the month of March 20×1. The invoice was raised in the month of April 20×1 for the entire project.Following journal entries will be passed in the books of R&D Ltd-1. Entry on completion of research phase in January 20×1 because it has completed its research obligation under the contractUnbilled Revenue A/cDebit3 million To Revenue (Sales) A/cCredit 3 million2. Entry on completion of the development phase in March 20×1 because it has completed its development obligation under the contractUnbilled Revenue A/cDebit7 million To Revenue (Sales) A/cCredit 7 million3. Entry at the time of issuance of invoice to Chemical Ltd and for recording receivable in the books in April 20×1Accounts Receivable-Chemical Ltd A/cDebit10 million To Unbilled Revenue A/cCredit 10 million0Reply Share ShareShare on FacebookShare on TwitterShare on LinkedInShare on WhatsAppLeave an answerCancel replyYou must login to add an answer. Username or email* Password* Captcha* Click on image to update the captcha. Remember Me! Forgot Password?