On October 31 of the current year,a contract was signed and a cheque received for services to be performed by October 31 of the following year.The Unearned Service Revenue account was credited for $4,800.Assuming services were performed evenly during the remainder of the year,the adjusting entry on December 31 will involve a:

Question

Quizplus · Accepted Answer

The services are performed evenly over 12 months, so by December 31, 2 months of services have been performed. Therefore, $800 ($4,800/12 months * 2 months) should be recognized as earned revenue, requiring a credit to Service Revenue for $800.

On October 31 of the Current Year,a Contract Was Signed