Question

According to a company's unadjusted trial balance at Dec. 31, the balance in the Unearned Revenue account was $800. This balance represents receipt of four months of service received on December 1 from a customer. The monthly contract service to be provided is for the months of Dec., Jan., Feb. and March. The required adjusting entry for Dec. 31 would be:

Answer 1

Step-by-step explanation:

The adjusting entry is shown below:

Unearned revenue A/c Dr $200

To Service revenue A/c for $200

(Being the unearned revenue is recorded)

We simply debited the unearned revenue account and credited the service revenue account so that the correct posting can be done

The computation is shown below:

= Unearned revenue balance ÷ number of months

= $800 ÷ 4 months

= $200