On August 1 of the current year, Hodges Company received $12,000 for legal services to be performed evenly throughout the next six months.
The adjusting entry on December 31 of the current year would include a:

Question

Quizplus · Accepted Answer

Service revenue received / 6 months= $12,000 / 6 = $2,000 /month
Service revenue current year: $2,000 x 5 months = $10,000
Service revenue next year: $2,000 x 1 month = $2,000
Original entry, August 1:
Cash $12,000
$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ Unearned Service Revenue $12,000
December 31 adjusting entry:
Unearned Service Revenue $10,000
$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ Service Revenue $10,000

On August 1 of the Current Year, Hodges Company Received