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paul-ette · Apr 4, 2012, 03:33 AM

A company ask for 40% down for work to be done in the future. In 2011 unearned revenue is $2,050,000. During 2012, $3,780,000 of cash was collected in total from customers: $2,124,000 regarding work completed during the year for customers who pai d 40% in 2011. And the balance representing the 40% pre payment for w ork to be done in 2013

a) prepare the entrie to record cash
b) determine the unearned revenue for Dec 31, 2012

pready · Apr 4, 2012, 05:52 AM

First you have to journalize the receipt of cash for 2012.

Debit Cash for the amount received
Credit Unearned Revenue for the same amount

Now for the amount of unearned revenue from 2011 that was earned in 2012.
Debit Unearned Revenue for 2,124,000
Credit Earned Revenue for the same amount

Now to calculate the remaining Unearned Balance you take your beginning balance subtract out your Debit entry to Unearned Revnue amount and add your Credit Entry to Unearned Revenue amount.

paul-ette · Apr 4, 2012, 06:18 AM

Originally Posted by pready

first you have to journalize the receipt of cash for 2012.

Debit cash for the amount received
credit unearned revenue for the same amount

now for the amount of unearned revenue from 2011 that was earned in 2012.
Debit unearned revenue for 2,124,000
credit earned revenue for the same amount

now to calculate the remaining unearned balance you take your beginning balance subtract out your debit entry to unearned revnue amount and add your credit entry to unearned revenue amount.

how do I get my credit entry

pready · Apr 4, 2012, 06:25 AM

You received $3,780 cash for work to be done in the future. Your entry is:
Debit Cash for 3,780
Credit Unearned Revnue for 3,780

So your Credit entry is for 3,780.

paul-ette · Apr 4, 2012, 06:34 AM

Originally Posted by pready

You received $3,780 cash for work to be done in the future. Your entry is:
Debit Cash for 3,780
Credit Unearned Revnue for 3,780

so your Credit entry is for 3,780.

the answer in the book is $2,290,000. I can't come up with this answer

pready · Apr 4, 2012, 07:18 AM

Either your amounts in the problem are incorrect or something is missing from the problem. Also your check figure could be incorrect.

Based on what you have provided; your Unearned Revenue amount is $2,050,000 for 2011, but your problem states that $2,124,000 was for work completed for 2011, so the difference is $74,000. So you will have to take the $3,780,000 minus $2,050,000 beginning unearned revnue amount and minus $74,000 difference to get your Unearned Revenue balance in 2012 (but this number is a lot less than your check figure).

paul-ette · Apr 4, 2012, 07:31 AM

Originally Posted by pready

Either your amounts in the problem are incorrect or something is missing from the problem. Also your check figure could be incorrect.

Based on what you have provided; your Unearned Revenue amount is $2,050,000 for 2011, but your problem states that $2,124,000 was for work completed for 2011, so the difference is $74,000. So you will have to take the $3,780,000 minus $2,050,000 beginning unearned revnue amount and minus $74,000 difference to get your Unearned Revenue balance in 2012 (but thyis number is a lot less than your check figure).

thank you I thought I was making the mistake but maybe the check figure is wrong thanks again for your help