Question

On September 1, Capitol Maintenance Company contracted to provide monthly maintenance services for the next seven months at a rate of $2,300 per month. The client paid Capitol $16,100 on September 1. The maintenance services began on that date. Assuming Capitol records deferred revenues using the alternative treatment, what would be the adjusting entry recorded on December 31

Answer 1

Debit Unearned Revenue, Credit Service Revenue for $9,200

Step-by-step explanation:

Date Account Titles Debit Credit

Sept 1 Cash $16,100

Unearned service revenue $16,100

Dec 31 Unearned service revenue $9,200

Service Revenue $9,200

($2300 * 4 months)