Alfie Limited and Benny Limited Formed a Joint Operation and Share

Alfie Limited and Benny Limited formed a joint operation and share in the output of the joint operation 60:40. The joint operation paid a management fee of $40 000 to Alfie Limited during the current period. The cost to Alfie Limited of supplying the management service was $28 000. Alfie Limited records the management fee revenue as follows:

A) DR Cash $40 000 CR Fee revenue $40 000
B) DR Cash $28 000 CR Fee revenue $28 000
C) DR Cash $ 24 000 CR Fee revenue $24 000
D) DR Cash $16 000 CR Fee revenue $16 000

Correct Answer:

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