Question: XYZ Company is about to close its books for the month of January. A sales invoice has not been generated for one of its top customers, ABC Inc., because the January revenue can only be estimated at this point in time. What needs to be done in order for the revenue to be recognized in January?
a) Nothing. However, the invoice should be generated when a definitive number can be billed.
b) A journal entry should be made to accrue the estimate in January and the actual revenue invoiced when the number becomes known.
c) ABC should be invoiced for the estimate and issued a debit or credit memo for the difference between the estimate and the actual number when it becomes known.