Question

The year-end trial balance for Beltway Corporation appears as follows: Beltway Corporation Trial Balance December 31 Debit Credit Cash $ 300 Accounts Receivable 500 Prepaid Insurance 60 Supplies 140 Equipment 4,000 Accumulated Depreciation, Equipment $ 800 Unearned Revenues 300 Common Stock 1,000 Retained Earnings 1,400 Service Revenue 3,000 Salaries and Wages Expense 1,000 Rent Expense 500 $ 6,500 $ 6,500 If the company has not yet recorded its performance of $200 of services to a customer who had paid in advance, the company should record an adjusting entry that

A) debits Depreciation Expense for $200 and credits Accumulated Depreciation for $200.B) debits Depreciation Expense for $200 and credits Equipment for $200.C) debits Accumulated Depreciation for $200 and credits Equipment for $200.D) debits Equipment for $200 and credits Accumulated Depreciation for $200.E) debits Depreciation Expense for $200 and credits Cash for $200.

Answer 1

Question:

If the company has not yet recorded its performance of $200 of services to a customer who had paid in advance, the company should record an adjusting entry that

Answer:

Debit unearned revenue 200

Credit service revenue 200

Step-by-step explanation:

As the customer pay the service in advance it put the company in a position of being force to perform this job thus; an oblgiation, a liability. It is not a gain until we perform the jobs.

The jobs are now performed therefore, we can now recognize the gain. We decrease the unearned revenue account like any liaiblity: we debited

and we increase our service revenue on credit side.