View Full Version : Adjusting for unearned revenues
senpic
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
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