Question

On April​ 1, 2017, Planet Services received​ $8,000 in advance of performing the services from a customer for three months of service long dash— ​April, May and June. What would be the journal entry to adjust the accounts at the end of​ May? (Do not round any intermediate​ calculations, and round your final answer to the nearest​ dollar.)A. Debit Service Revenue​ $5,333, and credit Accounts Receivable​ $5,333.B. Debit Unearned Revenue​ $5,333, and credit Service Revenue​$5,333.C. Debit Unearned Revenue​ $8,000, and credit Service Revenue​$8,000.D. Debit Service Revenue​ $2,667, and credit Unearned Revenue​$2,667.

Answer 1

The correct answer is B

Step-by-step explanation:

The journal entry which is to be recorded for the service revenue at the end of May is as follows:

Unearned Revenue A/c..............Dr $5,333​

Service RevenueA/c...........Cr $5,333.

Working Note:

Revenue = Total amount × Number of months / Total months

where

Amount is $8,000

Number of months means at the end of May which is a 2nd month

Total months is 3 months (April, May and June)

= $8,000 × 2 / 3

= $5,333