Question

zach company previously recorded receiving $1,000 cash in advance. zach company has earned ½ of the amount. the adjusting entry would be:

Answer 1

The adjusting entry would involve debiting the Unearned Revenue account and crediting the Revenue account for the amount earned.

Step-by-step explanation:

The adjusting entry in this scenario would be to recognize the amount of revenue that has been earned by the company. Since the company has earned half of the $1,000 cash received in advance, the adjusting entry would be as follows:

1. Debit the Unearned Revenue account by $500 to reduce the liability on the balance sheet.
2. Credit the Revenue account by $500 to recognize the revenue earned on the income statement.

This entry reflects the fact that the company has satisfied its obligation partially and has earned a portion of the cash received in advance.

Answer 2

The adjusting entry for the earned portion of the cash received in advance is to debit the Unearned Revenue account and credit the Revenue account.

Step-by-step explanation:

The adjusting entry for the earned portion of the $1,000 cash received in advance would be:

1. Debit the Unearned Revenue account by $500 (½ of $1,000) to reduce the liability.
2. Credit the Revenue account by $500 to recognize the revenue earned.

This entry would reflect that half of the cash received in advance has been earned and should no longer be considered as a liability but as revenue earned by the company.