Question

Sweet Air Flow sells prepaid HVAC contracts. When a contract is sold, cash is debited and...

  1. Sweet Air Flow sells prepaid HVAC contracts. When a contract is sold, cash is debited and contract revenue is credited. As of December 31, 2020, the year end, the following information was available regarding contract sales:

Date Sold      Amount          Contract Term

August 1        $72,000          1 year

October 1      $69,600          6 months

November 1 $42,000          3 months

The unadjusted balance of unearned contract revenue has a credit balance of $10,000. This represents contracts that expired during 2020. Give the adjusting entry needed for contract revenue.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Revenue to be recognized:
Beginning balance of Unearned contract revenue to be recognized 10000
Current contract
Aug to be recognized for 5 months (72000*5/12) 30000
Oct to be recognized for 3 months (69600*3/12) 17400
Nov to be recognized for 2 months (42000*2/12) 7000
Total Unearned contract revenue to be recognized 64400
Adjusting entry
S.no. Accounts title and explanations Debit $ Credit $
a. Unearned Contract revenue 64400
       Contract revenue 64400
(for revenue earned)
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Adjusting entries: Prepare the adjusting entries needed at December 31, 2020.If no entry is needed, write...
Adjusting entries: Prepare the adjusting entries needed at December 31, 2020.If no entry is needed, write NONE. 1.   Interest on a $ 42,000, 7%, six-year note payable was last paid on September 1, 2019. 2.   On May 31, 2020, Maison entered into a contract to provide services to a customer for 18 months beginning June 1. The customer paid the $ 18,000 fee in full on June 1 and Maison credited it to Service Revenue. 3.   On August 1, 2020,...
a. On September ?1, when we collected ?$58 comma 000 rent in? advance, we debited Cash...
a. On September ?1, when we collected ?$58 comma 000 rent in? advance, we debited Cash and credited Unearned Rent Revenue. The tenant was paying one? year's rent in advance. At December? 31, we must account for the amount of rent we have earned. b. Interest revenue of ?$3 comma 000 has been earned but not yet received on a ?$65 comma 000 note receivable held by the business. c. Salary expense is ?$8 comma 100 per daylong dashMonday through...
On October 1, 2021, Grasshopper lent $120,000 to another company. A note was signed with principal...
On October 1, 2021, Grasshopper lent $120,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022. On November 1, 2021, the company paid its landlord $25,500 representing rent for the months of November through January. Prepaid Rent was debited for the entire amount. On August 1, 2021, Grasshopper collected $30,000 in advance rent from another company that is renting a portion of Grasshopper’s building. The $30,000 represents one year’s rent,...
Sanchez Technical Institute (STI), a school owned by Carlos Sanchez, provides training to individuals who pay...
Sanchez Technical Institute (STI), a school owned by Carlos Sanchez, provides training to individuals who pay tuition directly to the school. STI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, is found on the trial balance tab. STI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31 follow. An analysis of STI’s insurance policies shows that...
Grasshopper Lawn Service provides general lawn maintenance to customers. The company’s fiscal year-end is December 31....
Grasshopper Lawn Service provides general lawn maintenance to customers. The company’s fiscal year-end is December 31. Information necessary to prepare the year-end adjusting entries appears below. On October 1, 2021, Grasshopper lent $65,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022. On November 1, 2021, the company paid its landlord $9,000 representing rent for the months of November through January. Prepaid Rent was debited for the entire amount. On...
Wildhorse Co. Trial Balance October 31, 2020 Debit Credit Cash $15,000 Supplies 2,600 Prepaid Insurance 600...
Wildhorse Co. Trial Balance October 31, 2020 Debit Credit Cash $15,000 Supplies 2,600 Prepaid Insurance 600 Equipment 4,000 Notes Payable $4,300 Accounts Payable 2,500 Unearned Service Revenue 1,000 Common Stock 10,400 Retained Earnings –0– Dividends 700 Service Revenue 10,400 Salaries and Wages Expense 4,900 Rent Expense 800 $28,600 $28,600 Assume the following adjustment data. 1. Supplies on hand at October 31 total $500. 2. Expired insurance for the month is $100. 3. Depreciation for the month is $80. 4. Services...
BigWaveDave Surf School provides surfing lessons to individuals in Tofino, BC and also offers “Certified Surfing...
BigWaveDave Surf School provides surfing lessons to individuals in Tofino, BC and also offers “Certified Surfing Instructor Training” to groups and individuals in other off-site locations. The business follows the practice of initially recording Prepaid Expenses and Unearned Revenues in balance sheet accounts (eg. prepaid asset or unearned liability). Following is the unadjusted trial balance. BigWaveDave only does accounting once per year at year end. BigWaveDave Surf School (a proprietorship) Unadjusted Trial Balance December 31, 2018 ACCOUNT DEBIT CREDIT Cash...
Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay...
Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2017, follow.    Additional Information Items An analysis of WTI's insurance policies shows that $3,071...
Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3 [The...
Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3 [The following information applies to the questions displayed below.] Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items athrough...
Required information [The following information applies to the questions displayed below.] All of the current year's...
Required information [The following information applies to the questions displayed below.] All of the current year's entries for Arsenault Company have been made, except the following adjusting entries. The company's annual accounting year ends on December 31 On September 1 of the current year, Arsenault collected six months' rent of $8,520 on storage space. At that date, Arsenault debited Cash and credited Unearned Rent Revenue for $8,520. On October 1 of the current year, the company borrowed $12,000 from a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT