04. on october 31 of the current year, a contract was signed, and a check was received for delivery services…

04. on october 31 of the current year, a contract was signed, and a check was received for delivery services to be performed by october 31 of the following year. the unearned service revenue account was credited for $9,600. assuming that the fiscal year ends on december 31 and services were performed evenly during the remainder of the year, the adjusting entry on december 31 will involve a: \n\n debit to service revenue for $8,000 \n\n credit to unearned service revenue for $1,600 \n\n debit to service revenue $1,600 \n\n debit to unearned service revenue $1,600

04. on october 31 of the current year, a contract was signed, and a check was received for delivery services to be performed by october 31 of the following year. the unearned service revenue account was credited for $9,600. assuming that the fiscal year ends on december 31 and services were performed evenly during the remainder of the year, the adjusting entry on december 31 will involve a: \n\n debit to service revenue for $8,000 \n\n credit to unearned service revenue for $1,600 \n\n debit to service revenue $1,600 \n\n debit to unearned service revenue $1,600

Answer

Explanation:

Step1: Calculate the time - period for which services are performed in the current fiscal year

The services are to be performed over 12 months from November 1 of the current year to October 31 of the next year. The current fiscal year ends on December 31. So the number of months of service performed in the current fiscal year is 2 months (November and December).

Step2: Calculate the amount of unearned revenue to be recognized as earned

The total unearned service revenue is $9,600 for 12 months. The monthly revenue amount is $\frac{9600}{12}=800$. For 2 months, the amount of revenue to be recognized is $800\times2 = 1600$.

Step3: Determine the adjusting entry

To recognize the earned revenue, we need to debit the Unearned Service Revenue account (to reduce the liability) and credit the Service Revenue account. So, we debit Unearned Service Revenue for $1,600.

Answer:

debit to Unearned Service Revenue $1,600