Final answer:
Robbie Inc. needs to adjust its revenue recognition after revising its estimated total consideration from $60,000 to $25,000. The appropriate journal entry would be a debit to an income statement revenue account and a credit to Accounts Receivable for the difference of $5,000.
Step-by-step explanation:
The question pertains to adjusting journal entries in accounting after a change in estimated revenues. Initially, Robbie Inc. estimated $60,000 of consideration for services provided over a 6-month period, accruing $10,000 each month. After three months, the estimate was revised to a total of $25,000.
To reflect this change in the accounting records, Robbie Inc. should adjust the revenue that has been recognized over the past three months. The company had already recognized $30,000 (3 months x $10,000), but the new estimate suggests that only $25,000 will be received in total. Therefore, the company needs to reduce its recognized revenue by $5,000 (the excess amount already recognized over the new estimate).
The adjusting journal entry would be a debit to an income statement account (e.g., Sales Revenue, Service Revenue, etc.) and a credit to an asset account (e.g., Accounts Receivable if the value had been recorded as a receivable). The exact account names might vary depending on Robbie Inc.'s accounting policies. The amount to record would be the difference between the previously recognized revenue and the new estimate, which is $5,000.