Question

At the beginning of the month, Bobcat Boards and Skis received $800 in advance for future services to be performed. At the end of the month, $300 worth of services were still owed to the customer. Select the adjusting entry that should be recorded at the end of the accounting period.

Answer 1

Answer:

The adjusting entry that should be recorded at the end of the accounting period:

Debit Unearned revenue $500

Credit Revenue $500

Explanation:

Following the Accrual accounting - an accounting method that revenue or expenses are recorded when a transaction occurs rather than when payment is received or made.

Bobcat Boards and Skis received $800 in advance for future services to be performed. At the end of the month, $300 worth of services were still owed to the customer.

The value of services were performed = $800 - $300 = $500.

The adjusting entry:

Debit Unearned revenue $500

Credit Revenue $500