Question

Revenue of $1,000 was collected in advance from customers for goods and was recorded as sales revenue. At year end, $600 of the revenue collected in advance is earned. The adjusting entry includes a:

a)credit to deferred revenue of $400
b)debit to revenue of $400
c)debit to revenue of $600
d)credit to deferred revenue $600
e)credit to revenue of $400
f)debit to deferred revenue of $400

Answer 1

The adjusting entry for the revenue collected in advance includes a debit to revenue of $600.

Step-by-step explanation:

The adjusting entry for the revenue collected in advance includes a debit to revenue and a credit to deferred revenue. In this case, $600 of the revenue collected in advance is earned, so the adjusting entry would include a debit to revenue of $600. The correct answer is (c) debit to revenue of $600.