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Ex. 2: During the period A, John Advertising Company receives $1,200 cash from a client. The advertising services valuing $60

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Answer #1

On receipt of money:

Cash A/c Dr $1200

To Sales $1200

Adjusting Entry

Since services valuing $600 are provided in period B which does not relate to the current period the following adjusting entry has to be passed.

Sales A/c Dr $600

To Unearned Revenue/ Income received in advance $600

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