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25 August, 04:21

Brief Exercise 229 On January 1, the Biddle & Biddle, CPAs received a $7,500 cash retainer for accounting services to be provided rateably over the next 3 months. The full amount was recorded to the liability account Unearned Service Revenue. Assuming that the revenue is recognized rateably over the 3 month period, what adjustment should be made at January 31?

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  1. 25 August, 04:45
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    Debit Credit

    Unearned revenue $2,500

    ($7,500/3)

    Revenue $2,500

    Explanation:

    The following adjusting entry shall be recorded in the accounts of the Biddle and Biddle, on January 31, in respect of revenue earned by it from accounting services:

    Debit Credit

    Unearned revenue $2,500

    ($7,500/3)

    Revenue $2,500
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