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    icatana's Avatar
    icatana Posts: 5, Reputation: 1
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    #1

    Oct 19, 2010, 06:52 PM
    Unearned revenue
    I would really appreciate some help regarding this problem:

    Projected amount of unearned revenue on the forecast balance sheet for 2010 is $105,000.
    Contracts outstanding at the end of 2010:
    Service Contract 1, dated October 1, 2010; service for six months $42,000
    Service Contract 2, dated November 1, 2010; service for one year 75,000
    Service Contract 3, dated December 1, 2010; service for one year 90,000

    • Based on the information provided, determine the amount of unearned revenue that should be reported on the balance sheet at the end of 2010. Assume that the company will provide services evenly over the contract period.
    • Based on your calculation in (a), prepare the journal entry to record the correct amount of unearned revenue at the end of 2010.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Oct 19, 2010, 08:24 PM

    The first contract has 3 months of unearned revenue
    The second contract has 10 months of unearned revenue
    The third contract has 11 months of unearned revenue
    icatana's Avatar
    icatana Posts: 5, Reputation: 1
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    #3

    Oct 20, 2010, 05:27 PM
    If the projected unearned revenue is 105,000 and the actual amount is 166,000, what would be the adjusting entry to reflect the correct amount on the balance sheet?

    Service revenue 61,000
    Unearned revenue 61,000

    Could you please confirm?
    aman123's Avatar
    aman123 Posts: 1, Reputation: 1
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    #4

    Feb 20, 2011, 01:02 PM
    Hey I am taking online class and I have the same question which I have to do.. do you have the answer for this questions? Please help and send me at [email protected]
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #5

    Feb 21, 2011, 07:14 AM

    You did not provide enough information to determine what the correct entry will be: You need to know why the unearned revenue increased. Did you receive an advance payment for a service or good to be performed or delivered later, or did you miscalculate or over estimate your service revenue.

    If you received cash your entry will be:
    Debit Cash for the difference between the two amounts given
    Credit Unearned Revenue for the amount.

    If you made an error in calculating service Revenue or over estimate then your journal entry will be correct.
    icatana's Avatar
    icatana Posts: 5, Reputation: 1
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    #6

    Feb 27, 2011, 11:59 AM
    My adjustment entry was correct
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