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Chapter 3: Q17SE_1 (page 161)

On September 1, 2018, Salem Landscaping collected $24,000 in advance from customers for landscaping services. The service revenue will be earned monthly over the 12-month period ending August 31, 2019. Requirements 1. Journalize the entry on September 1 by using the alternative treatment of deferred revenues. 2. Record the December 31, 2018 adjusting entry

Short Answer

Expert verified

Date	Account and Explanation	Debit	Credit
01-09-2018	Cash	$24,000
	Service Revenue		$24,000
	To record amount collected from customer

Step by step solution

01

Step-by-Step SolutionStep 1: Explanation of Unearned Revenue

Unearned revenue refers to revenue received in advance from the customers, in which goods or services will be provided later.

02

Explanation of Entry

On September 1, 2018, the advance receipt will be recorded by debiting cash and crediting service revenue by $24,000, respectively, to record receipt of deferred revenue as an alternative treatment.

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Most popular questions from this chapter

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