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25/SP-ACC-220-1M3, ACC-220-103 Chapter Three Individual Assignment- Adjusting Entries

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On October 1, the company receives $13,200 from a customer for a one-year property insurance policy. Deferred Revenue is credited on October 1st when they receive the cash. Record the associated adjusting entries for the end of the year, on December 31st, what amount needs to be adjusted on the deferred revenue account and how: You would debit Deferred Revenue for $3,300       and you would credit Service Revenue for $3,300

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Step-by-Step Analysis
To analyze the adjusting entry, first recall the transaction: on Oct 1 the company received 13,200 for a 12-month policy, creating a Deferred Revenue liability for the unearned portion. By Dec 31, three months have expired (Oct, Nov, Dec), so 3/12 of the revenue should be recognized as earned. That amount is 13,200 × (3/12) = 3,300. Option 1: Deferred Re......Login to view full explanation

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Receiving cash from customers before services are performed results in:

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