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:

Answer 1

Please see below

Step-by-step explanation:

The adjusting entries include

Revenue A/c. Dr. $400

To Deferred revenue A/c. Cr $400

($1,000 - $600)

* When a company makes a journal entry to record revenue that it had previously collected in advance, which was recorded as sales revenue, then the adjusting entry to record portion of the earned revenue received in advance would include a debit to revenue a/c