Sierra Event Planning Services Inc.records prepaid expenses and unearned revenues using the alternative treatments.It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On December 15,it collected $1,000 from a customer in advance for a series of events that will start late December and end in March.At the end of the year,it rendered approximately 10% of the services for its customer.The adjusting entry on December 31 will include a debit to Service Revenue for $900.

Question

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The adjusting entry on December 31 will include a debit to Service Revenue for $900 because the company rendered approximately 10% of the services for its customer by the end of the year. This is consistent with the alternative treatment of recording unearned revenues and making adjusting entries at the end of the year to bring the books to the full accrual basis.