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.DateAccounts and ExplanationDebitCreditDec. 31Prepaid Insurance1,300Insurance Expense1,300To record prepaid insurance.Dec. 1: Collected $ 2 comma 000cash in advance from customers. The service revenue will be earned $ 500monthly over the four-month period ending March 31, 2017. Record the related adjusting entry at December 31, 2016.If the business had earned all the revenue related to the December 1 cash collected in advance from customers prior to the end of the year, then no adjustment would be necessary. However, since the business earned only one month's worth of the revenue, an adjusting entry is needed at December 31, 2016to transfer the unearned portion of $ 1 comma 500(= $ 2 comma 000- $ 500) from the revenue account to a liability. Go ahead and prepare the adjusting entry.DateAccounts and ExplanationDebitCreditDec. 31Service Revenue1,500Unearned Revenue1,500To record unearned revenue.Dec. 1: Collected $ 6 comma 600cash in advance from customers. The service revenue will be earned $ 2 comma 200monthly over the three-month period ending February 28
, 2017. Record the related adjusting entry at December 31, 2016.Similar to our entry from above, we must transfer the unearned portion of the cash collected in advance to customer to a liability account as of December 31, 2016. In this case, only $ 2 comma 200of the $ 6 comma 600cash collected in advance has been earned. The remaining $ 4 comma 400(= $ 6 comma 600- $ 2 comma 200) must be shifted from the Service Revenue account to the Unearned Revenue account.To record unearned revenue.Post the entries to the T-accounts, and show their balances at December 31, 2016. reference to show the ending balance of each account. You do not need to calculate or enter the balance of the Cash account.)Requirement 5. Compare the account balances in Requirements 3 and 4. They should be equal.Compare the ending balances of the T-accounts you prepared in Requirement 3 with those of the T-accounts you prepared in Requirement 4. Are the balances the same or different? LOADING...
(Click the icon to view the T-accounts from Requirement 3.) LOADING...(Click the icon to view the T-accounts from Requirement 4.)THE SAME! LAST QUESTION
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Revenue, Prepaid rent, Generally Accepted Accounting Principles, Double-entry bookkeeping system, Service Revenue