The adjusting entry to record $675 of earned revenue received in advance would include a debit to Unearned Revenue.

Question

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When revenue is received in advance, it is initially recorded as unearned revenue, which is a liability account. An adjusting entry is required to transfer the amount from the unearned revenue account to the revenue account, which increases the revenue and reduces the liability. Therefore, the adjusting entry must include a debit to the unearned revenue account.

The Adjusting Entry to Record $675 of Earned Revenue Received