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    jrodgers's Avatar
    jrodgers Posts: 9, Reputation: 1
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    #1

    Jan 12, 2007, 10:41 AM
    Unearned Income jornal entry question
    In a journal entry for a company that has contracted for services and paid a partial amount for such services how would the journal entry be entered.

    I thought it would be as Cash - Debit, Unearned Income - Debit, Account Receivable - Credit.

    For example: If the contract is for 3 months at 2400 per month and I was paid in advance for the first 2 months $4800.

    Thanks,
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Jan 12, 2007, 08:02 PM
    When you received the money, you would:

    Dr. Cash 4,800
    Cr. Unearned Revenue 4,800

    Why? Because unearned revenue is a LIABILITY account. You have just gotten money, don't nothing for it and therefore must pay it back (theoretically).

    After the first month, you have now earned 2,400 of that 4,800 so you can decrease that liability instead of sending them a bill for it.

    Dr. Unearned Revenue 2,400
    Cr. Revenue 2,400
    teruterubozu's Avatar
    teruterubozu Posts: 1, Reputation: 0
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    #3

    Sep 5, 2009, 09:00 PM

    What the journal entries for unearned fees on July 31,2003,rm750
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    Sep 6, 2009, 12:12 AM

    teruterubozu, please always start your own thread for your post and not piggy-back into a two-year old thread -- this just confuses people.

    It also cannot be answered without knowing other information. The only account implied in that statement is unearned fees, but nothing about what other account might be used. It could be someone is paying up front now or it's an adjusting entry... can't tell from that.
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