adjusting for unearned revenues

senpic · #1 Sep 11, 2008, 04:17 PM

Tao receives $10,000 cash in advance for 4 months of legal services on October 1, 2008, and records it by debiting cash and crediting unearned revenue both for $10,000. It is now December 31, 2008, and Tao has provided legal services as planned. What adjusting entry shoould Tao maketo account for the work performed from October 1 through December 31, 2008?

ashley568 · Sep 11, 2008, 08:32 PM

Quote:

Originally Posted by senpic

Tao receives $10,000 cash in advance for 4 months of legal services on October 1, 2008, and records it by debiting cash and crediting unearned revenue both for $10,000. It is now December 31, 2008, and Tao has provided legal services as planned. What adjusting entry shoould Tao maketo account for the work performed from October 1 through December 31, 2008?

If he has 10,000 it needs to be equally spread over the 4 months. Oct-dec is 3 months. If crediting unearned rev increases it than debiting will decrease it and the then you need to credit the revenue account since the work was performed.

AdamUTsel · Sep 12, 2008, 08:46 AM

DR. Unearned revenue 7500
CR. Revenue 7500



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