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Gwar [14]
2 years ago
6

A company performs 20 days of work on a 30-day contract before the end of the year. The total contract is valued at $6,000, with

payment received in advance. The $6,000 cash receipt was initially recorded as Unearned Revenue. The required adjusting entry includes a $4,000 debit to Unearned Revenue.
a. True
b. False
Business
1 answer:
snow_tiger [21]2 years ago
5 0

Answer:

a. True

Explanation:

Based on the information given the required adjusting journal entry will includes a $4,000 DEBIT TO UNEARNED REVENUE reason been that we were told that the company carried out 20 days of work out of 30-day contract before the end of the year which means that the company has earned an UNEARNED REVENUE by the end of the year of the amount of $4,000 calculated as ($6,000 * 20 days /30 days) which is why the adjusting Journal entry would includes a $4,000 DEBIT TO UNEARNED REVENUE.

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