Tao Co. receives $10,000 cash in advance for 4 months of legal services on October 1, 2013, and records it by debiting Cash and crediting Unearned Revenue both for $10,000. It is now December 31, 2013, and Tao has provided legal services as planned. What adjusting entry should Tao make to account for the work performed from October 1 through December 31, 2013?

Your adjusting entry will be for months Oct, Nov, and Dec. You have to take your initial receipt of $10,000 times 3/4 to get your amount for 3 months of legal services provided.

Your accounts will be Unearned Revenue and Earned Revenue.