Question

On December​ 1, 2019,​ Carrie's Day Care receives $ 2 comma 700 in advance for an agreement to care for​ Susan's children for the months of​ December, January, and February.​ Carrie's Day Care will make an adjusting entry on December​ 31, 2019​ to:

Answer 1

Unearned Revenue $900 (debit)

Revenue $900 (credit)

Step-by-step explanation:

On 1 December Carrie's Day Care recorded Unearned Revenue of $2,700 the entry is as follows ;

Cash $2,700 (debit)

Unearned Revenue $2,700 (credit)

By end of the first month (31 December) one month`s revenue will have been earned and the unearned revenue balance decreases. The entries are as follows :

Unearned Revenue $900 (debit)

Revenue $900 (credit)

Calculation : December Revenue = 1/3 × $2,700 = $900