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Assume a company receives an advance payment on 10-1 from a customer in the amount of $6,000 for work to be done evenly over the next 12 months. Record the TRANSACTION and ADJUSTING ENTRIES on 10-1 and 12-31 respectively Use the regular and the alternative approaches. Alternative Approach 10-1: DR: DR: CR: CR: 12-31: DR: DR: CR: CR: T Accounts Unearned Service Revenue Unearned Service Revenue Service Revenue Service Revenue
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usting Entries Effects on** Profit or Loss Account Statement of financial Position Date Particulars Debit Credit AssetsLiabilities Stockholders Net Income Item 1 12/13/2012 Building Rent (6000*2/6) 2,000 (2,000) (2,000) Pre-received Rent 2,000 2,000 (Rent received in advance for the months of January and February booked as pre-received and the revenue for the period reduced to that extent) Item 2 12/13/2012 Salary Expense (20,000 *2/5) 8,000 (8,000) (8,000) Salary Expense Payable 8,000 8,000 (Salary payable for the two days that fall in the year 2012 booked and a corresponding liability for the payable salary booked) 1/3/2013 Salary Expense (20,000 *3/5) 12,000 8,000 (12,000) (12,000) (8,000) Salary Expense Payable Cash/Bank Account 20,000 (20,000) (Being payment of salary to employees made for the week ended 01/03/13)

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