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-   -   Accounting ll problems unearned revenue (https://www.askmehelpdesk.com/showthread.php?t=648331)

  • Apr 4, 2012, 03:33 AM
    paul-ette
    Accounting ll problems unearned revenue
    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
  • Apr 4, 2012, 05:52 AM
    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.
  • Apr 4, 2012, 06:18 AM
    paul-ette
    Quote:

    Originally Posted by pready View Post
    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
  • Apr 4, 2012, 06:25 AM
    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.
  • Apr 4, 2012, 06:34 AM
    paul-ette
    Quote:

    Originally Posted by pready View Post
    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
  • Apr 4, 2012, 07:18 AM
    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 this number is a lot less than your check figure).
  • Apr 4, 2012, 07:31 AM
    paul-ette
    Quote:

    Originally Posted by pready View Post
    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

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