Final answer:
The adjusting entry to record the amount of revenue for which the seller has fulfilled its obligation to its buyers that had been collected in advance requires a credit to Deferred Revenue and a debit to Sales Revenue.
Step-by-step explanation:
The adjusting entry to record the amount of revenue for which the seller has fulfilled its obligation to its buyers that had been collected in advance requires a credit to Deferred Revenue and a debit to Sales Revenue.
This entry is necessary because when revenue is collected in advance, it is initially recorded as a liability called Deferred Revenue. As the seller fulfills its obligation and delivers the goods or services, the revenue should be recognized and transferred from Deferred Revenue to Sales Revenue.
For example, if a company receives an advance payment of $1,000 for a service to be provided over the course of four months, and at the end of the first month, it has fulfilled $250 worth of the service, the adjusting entry would credit Deferred Revenue for $250 and debit Sales Revenue for $250.