Frenzo Furniture Co. is a manufacturer of specialty furniture. Because each piece is custom manufactured, the company requires a down payment of 40% of the estimated cost of the finished piece before production begins. Frenzo Furniture Co. should record the deposit as a

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The deposit received from the customer before production begins is not considered as revenue earned by the company yet. Therefore, it should be recorded as a liability in the form of unearned revenue until the furniture is delivered and the revenue is earned. Therefore, credit to unearned revenue is the appropriate choice.