A company accepted $6,000 on August 1 for services to be performed evenly over the next 12 months. The adjusting entry on December 31 would include a:

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Unearned revenue is a liability account that represents services that have been paid for but not yet performed. As services are performed, the unearned revenue account is reduced and the service revenue account is increased. On December 31, six months of services have been performed, so the unearned revenue account should be reduced by $2,500 and the service revenue account should be increased by $2,500.

A Company Accepted $6,000 on August 1 for Services to Be