Answer:
Security First
Debit Accounts Receivable $2,760
Credit Consulting Revenue $2,760
To record the accrued revenue for consulting services.
Explanation:
a) Data and Calculations:
Value of a consulting services contract = $4,140
Period of services = December 12 to January 10
Payment date = January 10
The fee will be divided by 30 days with 20 days' apportioned to the current year while 10 days' will be apportioned to the following year, thus:
Current year's revenue = $4,140 * 20/30 = $2,760
Next year's revenue = $4,140 * 10/30 = $1,380
Therefore, the unadjusted balance in Consulting Revenue will increase by $2,760 with the corresponding debit entry in the accounts receivable account.
