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?

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.

DR. Unearned revenue 7500
CR. Revenue 7500