Steelar company received $ 9,000 as an advance payment from a customer on june 1. At...
Steelar company received $ 9,000 as an advance payment from a customer on june 1. At Sept 30, management indicates that 60% of the services have been rendered to date on the job. For the adjusting entry on Sept 30, which statement is correct? 1 Unearned revenue is debited for $5,400 2 Unearned revenue is credited for $ 5,400 3 Revenue earned is credited for $ 4,600 4 Revenue earned is debited for $ 4,600
Homework Answers
| 60 % of services have been rendered hence 60% of $9000 should | ||||
| be recognized as revenue which is equal to | ||||
| =$9000*60% | ||||
| =$5400 | ||||
| Balance is unearned revenue | ||||
| =$9000-5400 | ||||
| =$3600 | ||||
| At the time of receipt of the advance, the unearned revenue account had been credited | ||||
| of $9000, now for recognizing revenue | ||||
| The journal entry for the same would be | ||||
| Date | Account Title | Debit | Credit | |
| Unearned Revenue | $ 5,400 | |||
| Revenue | $ 5,400 | |||
| ( to record revenue and unearned revenue against advance from the customer) | ||||
| Therefore option "1" is correct. | ||||
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