On October 15, Gallery Corp. received $12,500 as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31, 10% of the contract was completed. Gallery Corp. needs to prepare an adjusting entry for $1,250.

Question

Quizplus · Accepted Answer

The adjusting entry for $1,250 is necessary to recognize the portion of the revenue that has been earned (10% of the contract). This will increase Consulting Revenue and decrease Unearned Consulting Revenue by $1,250.