Question

This Test: 40pes possi On February 1. Caden Wuton Law Firm contacted to provide 35.000 og for the month and received 55.000 chrom the conting Word dollar temerament, what would be adjusting entry recorded on February 287 Date Accounts and Explanation Debit Credit ОА Cash Service Revue 5.400 OB 4.500 4500 Ос med en 900 900 OD 5.600 5,400

Answer 1

Your required answer is option B i.e.

Date Accounts and Explanation Debit Credit B. Service Revenue $4,500 Unearned Revenue $4,500

Explanation:

When Walton Law Firm has received the cash then they had passed the following Journal:

Date Accounts and Explanation Debit Credit Feb-01 Cash $5,400 Service Revenue $5,400

Therefore on 28 February to record the Unearned Revenue they have to reverse the Service Revenue with the amount of $4,500 ($5,400*5/6). Therefore on 28th February following joural will be passed:

Date Accounts and Explanation Debit Credit Feb-28 Service Revenue $4,500 Unearned Revenue $4,500

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