Question

Brief Exercise 229 On January 1, the Biddle & Biddle, CPAs received a $7,500 cash retainer for accounting services to be provided rateably over the next 3 months. The full amount was recorded to the liability account Unearned Service Revenue. Assuming that the revenue is recognized rateably over the 3 month period, what adjustment should be made at January 31?

Answer 1

Answer:

                                                   Debit                  Credit

Unearned revenue                    $2,500

($7,500/3)

Revenue                                                                $2,500

Explanation:

The following adjusting entry shall be recorded in the accounts of the Biddle and Biddle, on January 31, in respect of revenue earned by it from accounting services:

                                                   Debit                  Credit

Unearned revenue                    $2,500

($7,500/3)

Revenue                                                                $2,500