Question

For each separate case below, follow the three-step process for adjusting the unearned revenue liability account at Dec Step t Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3 Record the December 31 adjusting entry to get from step 1 to step 2 Assume no other adjusting entries are made duing the year a Tho Co. receives $10.,300 cash in advance for four months of legal services on October 1,2017, and records it by debiting Cash and crediting Unearned Revenue both for $10,00. it is now Decamber 31, 2017, and Tao has provided iegal services as pianned what adjusting entry shouid Tao maks to account for the work performed trom October 1 through December 31, 20177 Debt or Credn? tep1: Determine wha tne ourrent aooount balance equais 5 10.300 0.300 10 800 step 2 Determine what tne ourrent aooount alance should equal step3 Recod te Decemoer 31 aqjueting entrytoget rom stp1to2 Unearned revenve Legal services revene D.んCaden atarted a new publaton caled Contest News. its subscribers pay S4 to receive 12 monthly issues, witn every new subscriber, Caden dots Casれand credits Uneamed Subscrpton Revenue for the amounts received. The company has 100 new subscribers as of July 1, 2017 it tends contest Nees to eacn or these subscribers every month from Jury through December a sume no changes in subscribers, prepare the journal entry that Caden must make as of Decamber 31, 2017, to adjust the Subscription Revenue account and the Unearned Subscription Revenue account Unearned subscription Debit or Credn Step 1: Devemine wnat the current account balance equals 5 3.400 3.400 3.400 step 2 Denermine what the current acoount batance should equal 5 1.700 1,700 1,700 step3 Reoond the Decemoer 31 ajusting entry to gee from step 1 t0 step 2 Adjusting Entry Debit Creait Uneaned revenue 1.700 Subecription revenue 1,700

step by step to get the answer. Only got some.

Answer 1

Tao Co Problem Debit or Credit? Credit Unearned revenue $10,800 $10,800 Step 1: Determine what current account balance equals Step 2: Determine what the current account balance should equal Step 3: Record the December 31 adjusting entry to get from step 1 & step 2 $2,700 Credit $2,700 Unearned revenue $8,100 [$10,800 x 3/4] Legal Services Revenue $8,100 NOTE: For Step-1, it is an advance receipt from customer as on Oct 1 and so entire amount is credited to unearned revenue account as it is a current liability For Step-2, out of 4 months' advance received from customer on Oct 1, three months' revenue are earned as of Dec 31. So, 1/4th of unearned revenue shall be the closing balance in unearned revenue ledger which is equal to: $10,800 x 1/4 $2,700 For Step-3, out of 4 months' advance received from customer on Oct 1, three months' revenue are earned as of Dec 31. So, 3/4th of unearned revenue shall be recognized as legal service revenue as of Dec 31 and so unearned revenue account is debited for $8,100 ($10,800 x 3/4) by crediting the legal service revenue account.