Question

For each separate case below, follow the three-step process for adjusting the accrued revenue account onDecember 31. Step 1: Determine what the current account balance equals. Step 2: Determine what thecurrent account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1to step 2. Assume no other adjusting entries are made during the year.

a. Accounts Receivable. At year-end, the Krug Company has completed services of \(19,000 for a client,but the client has not yet been billed for those services.

b. Interest Receivable. At year-end, the company has earned, but not yet recorded, \)390 of interestearned from its investments in government bonds.

c. Accounts Receivable. A painting company collects fees when jobs are complete. The work for onecustomer, whose job was bid at $1,300, has been completed, but the customer has not yet beenbilled.

Short answer

Accounts receivable account debit and service revenue credit with $19,000.

Step-by-step solution

Definition of accounts receivable

When service is rendered, but the amount is due, this amount is known as accounts receivable.

Current account balance account equals

The current account balance equals $0.

The current account balance should equal

The current account balance should equal $19,000.

Adjusting entry

	Journal entry
Date	Particulars	Debit	Credit
December 31	Account Receivable	$19,000
	Service Revenue		$19,000
	(Adjustment entry of accounts receivable)