The accounting records of Patricia Event Planning Services include the following select unadjusted balances on December 31,2014: Salaries Expense,$6,000; Service Revenue: $20,000; Unearned Revenue,$400; Supplies Expense,$600; Rent Expense,$300; Depreciation Expense-Equipment,$200. Later in December,the company worked with a new client and provided event planning services for an upcoming event.It will receive the full amount of $1,200 when the event is completed in January,2015.As of the end of December,2014,it rendered one-third of the services covered by the contract.The company made the accrual adjustments.The final adjusted balance of Service Revenue,as shown on the adjusted trial balance,should be a ________.

Question

Quizplus · Accepted Answer

Since the company has provided one-third of the event planning services covered by the contract, the amount of revenue earned in December is ($1,200 ÷ 3) = $400.
The unearned revenue account must be reduced by $400 to reflect the earned portion of revenue. Therefore, the adjusting entry will be:
Service Revenue $400
Unearned Revenue $400
The adjusted balance of Service Revenue will be $20,000 + $400 = $20,400. Since Service Revenue is a revenue account and a credit balance account, the final adjusted balance will be a credit balance of $20,400. Therefore, the correct answer is D.

The Accounting Records of Patricia Event Planning Services Include the Following