Question

Deluxe Building Services offers custodial services on both a contract basis and an hourly basis. On January 1, 2019, Deluxe collected $20,100 in advance on a six-month contract for work to be performed evenly during the next six months. Assume that Deluxe closes its books and issues financial reports on a monthly basis.

a. Prepare the entry on January 1 to record the receipt of $20,100 cash for contract work (1) using the financial statements effect template and (2) in journal entry form.

b. Prepare the adjusting entry to be made on January 31, 2019, for the contract work done during January (1) using the financial statements effect template and (2) in journal entry form.

c. At January 31, a total of 30 hours of hourly rate custodial work was unbilled. The billing rate is $19 per hour. Prepare the adjusting entry needed on January 31, 2019, (2) in journal entry form. (The firm uses the account Fees Receivable to reflect amounts due but not yet billed).

General Journal
Date	Description	Debit	Credit
Jan 1.
	To record fee received in advance.
Jan 31.
	To record service fees earned on contract.
Jan 31.
	To record unbilled service fees earned.

Answer 1

Answer

• Requirement asked

General Journal
Date	Description	Debit	Credit
Jan 1.	Cash	$20,100
	Unearned Revenue		$20,100
	To record fee received in advance.
Jan 31.	Unearned Revenue	$3,350
	Service Revenue ($20100 x 1/6 months)		$3,350
	To record service fees earned on contract.
Jan 31.	Account receivables (30 hours x $ 19)	$570
	Service Revenue		$570
	To record unbilled service fees earned.