Answer:
Jan.1
Dr Cash $ 42,000
Cr Unearned Service Revenue $42,000
Jan.31
Dr Unearned Service Revenue $ 7,000
Cr Service Revenue $ 7,000
Jan.31
Dr Account Fees Receivable $1,000
Cr Service Revenue $1,000
Explanation:
Preparation of Journal Entries
Jan.1
Dr Cash $ 42,000
Cr Unearned Service Revenue $42,000
(To record 6 month contract)
Jan.31
Dr Unearned Service Revenue $ 7,000 (42,000*1/6)
Cr Service Revenue $ 7,000
(To record january service fees earned on contract)
Jan.31
Dr Account Fees Receivable $1,000 ($40hours*$25 per hour)
Cr Service Revenue $1,000
(To record unbilled service fees at January 31)
