Carithers Cleaning Service received advance payments from customers during 2019 of $24,000. At December 31, 2019, $5,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2019, the balances in the Unearned Service Revenue and Service Revenue accounts will be:
Unearned Service Revenue Service Revenue

Question

Carithers Cleaning Service received advance payments from customers during 2019 of $24,000. At December 31, 2019, $5,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2019, the balances in the Unearned Service Revenue and Service Revenue accounts will be: ​
Unearned Service Revenue Service Revenue

Quizplus · Accepted Answer

The correct answer is B) $5,000 $19,000. This is because $24,000 was initially received as advance payments, and by the end of the year, $5,000 was still unearned. This means $19,000 ($24,000 - $5,000) was earned during the year and should be recognized as Service Revenue. The remaining $5,000 is still unearned and should be reported as Unearned Service Revenue.

Carithers Cleaning Service Received Advance Payments from Customers During 2019