Explanation Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. Adjusting entries : Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs. Prepare journal on December 31 to record the revenue that Incorporation B has earned: Date Account Title and Explanation Debit ($) Credit ($) December 31 Unearned subscription revenue ( $ 2 , 700 12 × 7 Months) 1,575 Subscription revenue 1,575 (To record the adjusting entry for subscription revenue earned for June to December) Table (1) Unearned subscription revenue is a liability

Financial Accounting, Student Value Edition (4th Edition)

4th Edition

ISBN: 9780134114811

Author: Robert Kemp, Jeffrey Waybright

Publisher: PEARSON

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Prepare journal and post the adjusting entry on December 31 to record the revenue that Incorporation B has earned.

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Financial Accounting, Student Value Edition (4th Edition)

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Prepare journal and post the adjusting entry on December 31 to record the revenue that Incorporation B has earned.

Solution Summary: The author explains journaling and adjusting entries to record the revenue that Incorporation B has earned. Journaling records the debit and credit aspects of transactions to abide by the double-entry system.

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Prepare journal and post the adjusting entry on December 31 to record the revenue that Incorporation B has earned.

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