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21 January, 06:29

Record journal entries for the following transactions. (a) On December 1, $18,000 was received for a service contract to be performed from December 1 through April 30. Dec. 1 (b) Assuming the work is performed evenly throughout the contract period, prepare the adjusting journal entry on December 31. Dec. 31

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  1. 21 January, 06:56
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    See explanation section

    Explanation:

    (a) December 1 Cash Debit $18,000

    Unearned revenue Credit $18,000

    Note: The company received the money in advance for a contract to do during December to April. Therefore, they received cash while a liability increased due to receiving advance money.

    (b) December 31 Unearned revenue Debit $3,600

    Service revenue Credit $3,600

    Note: As the company started performing, after the completion of 1st month, i. e., December 1 to December 31, the advance money started expiring because of providing services. Moreover, as the service is performed evenly for 5 months, the 1st month's revenue = $ (18,000/5) = $3,600.
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Home » Business » Record journal entries for the following transactions. (a) On December 1, $18,000 was received for a service contract to be performed from December 1 through April 30. Dec.
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