Required: 1. Prepare the adjusting journal entries needed at December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Dec. 31 2. What is the effect on the financial statements if these adjusting entries are not made? In both of these cases, a liability (unearned service revenue) was originally created when cash was satisfied (prior to the revenue being earned). The adjusting entries period. If these adjusting entries were not made, revenue would be addition, the of revenue would result in an stockholders' equity will also be prior to the performance obligation being the previously created liability by the amount of revenue earned during the and liabilities (unearned revenue) would be In of net income. Finally, because revenue is then closed to Retained Earnings, 3. What is the balance in Unearned Service Revenue at December 31 related to the two cleaning contracts?
Required: 1. Prepare the adjusting journal entries needed at December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Dec. 31 2. What is the effect on the financial statements if these adjusting entries are not made? In both of these cases, a liability (unearned service revenue) was originally created when cash was satisfied (prior to the revenue being earned). The adjusting entries period. If these adjusting entries were not made, revenue would be addition, the of revenue would result in an stockholders' equity will also be prior to the performance obligation being the previously created liability by the amount of revenue earned during the and liabilities (unearned revenue) would be In of net income. Finally, because revenue is then closed to Retained Earnings, 3. What is the balance in Unearned Service Revenue at December 31 related to the two cleaning contracts?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Deferred Revenue Adjusting Entries
Olney Cleaning Company had the following items that require adjustment at year end.
a. For one cleaning contract, $10,300 cash was received in advance. The cash was credited to Unearned Service Revenue upon receipt. At year end, $1,820 of the service
revenue was still unearned.
b. For another cleaning contract, $8,000 cash was received in advance and credited to Unearned Service Revenue upon receipt. At year end, $2,600 of the services had
been provided.
Required:
1. Prepare the adjusting journal entries needed at December 31. If an amount box does not require an entry, leave it blank.
Dec. 31
Dec. 31
00 00
00
2. What is the effect on the financial statements if these adjusting entries are not made?
In both of these cases, a liability (unearned service revenue) was originally created when cash was
satisfied (prior to the revenue being earned). The adjusting entries
period. If these adjusting entries were not made, revenue would be
addition, the
of revenue would result in an
stockholders' equity will also be
prior to the performance obligation being
the previously created liability by the amount of revenue earned during the
and liabilities (unearned revenue) would be
. In
of net income. Finally, because revenue is then closed to Retained Earnings,
3. What is the balance in Unearned Service Revenue at December 31 related to the two cleaning contracts?
$
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