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Fairy Limited and Gardens Limited formed a joint operation and share in the output of...

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Accounting

  1. Fairy Limited and Gardens Limited formed a joint operation and share in the output of the joint operation 60:40. The joint operation paid a management fee of $42 000 to Fairy Limited during the current period. The cost to Fairy Limited of supplying the management service was $35 000. Fairy Limited records the management fee revenue as follows:

a. DR Cash $42 000

CR Fee revenue $42 000

b. DR Cash $35 000

CR Fee revenue $35 000

c. DR Cash $28 000

CR Fee revenue $28 000

d. DR Cash $7 000

CR Fee revenue $7 000

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