X Company prepares monthly financial statements. On January 1, a customer paid X

Question

X Company prepares monthly financial statements. On January 1, a customer paid X Company $34,500 in advance for cleaning services to be performed during the following four months, once in January, once in February, once in March, and once in April. What will be the result of the January 31 adjusting entry on X Company's financial statements?

A) a $8,625 increase in the Cash account on the Balance Sheet
B) a $8,625 decrease in the Retained Earnings account on the Balance Sheet
C) a balance of $8,625 in the Deferred Revenue account on the Balance Sheet
D) a $8,625 decrease in the Cash account on the Balance Sheet
E) a $8,625 increase in the Deferred Revenue account on the Balance Sheet
F) revenue of $8,625 reported on the Income Statement

Explanation / Answer

F) revenue of $8,625 reported on the Income Statement

As company has completed work for 1 month so 34500/4= 8625$ can be shown as revenue in income statement.

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