Originally Posted by anoredis
There's something screwy here. I'm not understanding the transaction to begin with. It doesn't help that I don't know what month you're doing these entries in. (We cannot know how to relate the dates in the transaction to the current date if we don't know what the current date is.)
It sounds like
they did $800 of the work on that very first day, July 31. That is the only way anything could have been accrued in a July adjusting entry when the work was started on July 31. That would put the $800 in receivables, not unearned revenue. Unearned revenue is a deferral, not an accrual. (Notice it says "accrued revenues" -- an accrual is when you already did the work but you haven't gotten paid.)
I'm also assuming the $800 is part of the $1400, leaving $600.
In addition to distinguishing between a deferral and an accrual, something else you also have to watch out for is that just because something hasn't been billed doesn't mean it can't be in a receivable account. Receivables represents what is OWED to you. Just because you haven't sent a bill yet doesn't mean it's not owed. It just means you haven't sent the bills yet. So something was earned, and therefore owed to you, as of the end of July, but it hadn't been billed yet. It sounds like they're just now billing the $1400 to the client, but $800 would already be in the accounts
. (It would have been better had they done a reversing entry for this.) The revenue of $800 would already have been recorded in July too. In other words, $800 is already recorded in the books, period.
And I don't know what "resp" means.