On September 1, Capitol Maintenance Company contracted to provide monthly mainte

Question

On September 1, Capitol Maintenance Company contracted to provide monthly maintenance services for the next nine months at a rate of $2,400 per month. The client paid Capitol $21,600 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?

A.No entry is needed since revenue was recorded on September 1.

B.Debit Service Revenue and credit Unearned Revenue for $9,600

C.Debit Unearned Revenue and credit Service Revenue for $9,600

D.Debit Service Revenue and credit Unearned Revenue for $12,000

Explanation / Answer

Solution: Debit Service Revenue and credit Unearned Revenue for $12,000

Working: 2400 * 5 months (9 months - 4 months)

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.