During December, LafertyLaferty designed a landscape plan and the client prepaid $ 8 comma 000$8,000. LafertyLaferty recorded this amount as Unearned Revenue. The job will take several months to complete, and LafertyLaferty estimates that the company has earned 6060 percent of the total revenue during the current year. Journalize the subsequent journal entry that LafertyLaferty will record when the job is complete

Question

Anabel Thompson

Business

31 January, 07:14

During December, LafertyLaferty designed a landscape plan and the client prepaid $ 8 comma 000$8,000. LafertyLaferty recorded this amount as Unearned Revenue. The job will take several months to complete, and LafertyLaferty estimates that the company has earned 6060 percent of the total revenue during the current year. Journalize the subsequent journal entry that LafertyLaferty will record when the job is complete

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Answers (1)

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Romeo Zuniga · Answer 1

The answer is:

Dr Unearned Service Revenue 4,800

Cr Service Revenue 4,800

Explanation:

Since Laferty completed 60% of the landscape plan during this year, they should record $4,800 as earned revenue ($8,000 x 60%), while the remaining $3,200 should stay as unearned revenue. The journal entries should be as follows:

Dr Unearned Service Revenue 4,800

Cr Service Revenue 4,800