Question

Acct 2301.M60 Principles of Financial Acct. Silvia Rodriguez & Save 5 of 10 (5 complete) Homework: Exercises Ch 3 Score: 0 of 10 pts E3-21 (book/static) Consider the following situations: (Click the icon to view the situations.) HW Score: 43 33%, 43.33 of 100 pl Question Help Assume the company records adjusting entries monthly. Journalize the adjusting entries needed as of January 31. (Record debits first, then credits Select the explanation on the last line of the journal entry table.) a. Business receives $3,200 on January 1 for 10-month service contract for the period January 1 through October 31. (When the cash was received on January 1, assume that a liability account was credited. Assume services are performed evenly each month throughout the term of the contract.) Date Accounts and Explanation Credit Jan. 31 Choose from any list or enter any number in the input fields and then click Check Answer 3 parts remaining Clear All Check Answer 8:23 AM A 2/16/2020

Answer 1

Journal Entry for Adjustment:

Following entry will be passed as on January 31:

Date	Particulars	Debit	Credit
Jan. 31	Unearned Revenue	$320
	Service Revenue		$320
	(Recognized Service Revenue for January, against 10-month service contract for which $3,200 were received on Jan 1)

Explanation:

On Jan.1 when the sum of $3,200 was received for Service Contract which will last for 10 months, Unearned Revenue (Liability) Account was credited to recognize the liability of Revenue received in advance. At the end of every month till October 31, Such liability will be decreased against the increase of revenue from operation in the form of services provided. Hence, On Jan 31 similar entry is passed for 1/10th of the contract amount.