On December 1,2015,Carrie's Day Care receives $3,000 in advance for an agreement to care for Susan's children for the months of December,January,and February.Carrie's Day Care will make an adjusting entry on December 31,2015 to:

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The $3,000 received from Susan represents unearned revenue because the service is not yet performed by Carrie's Day Care. Therefore, on December 31, an adjusting entry must be made to recognize the revenue earned during the month of December. This would involve debiting the Unearned Revenue account for $1,000 (1/3 of the $3,000 received) and crediting the Revenue account for $1,000. The remaining $2,000 will be recognized as revenue in January and February.

On December 1,2015,Carrie's Day Care Receives $3,000 in Advance for an Agreement