on august 1 of the current year, trevor beck received $4,800 for legal services to be performed evenly…

on august 1 of the current year, trevor beck received $4,800 for legal services to be performed evenly throughout the next six months. the adjusting entry on december 31 of the current year would include a:\n\na. debit to service revenue of $800.\nb. credit to unearned service revenue of $4,000.\nc. debit to unearned service revenue of $800.\nd. credit to service revenue of $4,000.

on august 1 of the current year, trevor beck received $4,800 for legal services to be performed evenly throughout the next six months. the adjusting entry on december 31 of the current year would include a:\n\na. debit to service revenue of $800.\nb. credit to unearned service revenue of $4,000.\nc. debit to unearned service revenue of $800.\nd. credit to service revenue of $4,000.

Answer

Explanation:

Step1: Calculate monthly revenue

Total amount received is $4800 for 6 months. So monthly revenue is $\frac{4800}{6}=800$.

Step2: Calculate revenue earned from August 1 to December 31

Number of months from August 1 to December 31 is 5 months. So revenue earned is $800\times5 = 4000$.

Step3: Analyze adjusting entry

When cash was received on August 1, the entry was debit Cash and credit Unearned Service Revenue (liability) for $4800. At December 31, we need to recognize the revenue earned. So we debit Unearned Service Revenue (to reduce the liability) and credit Service Revenue. The amount is $4000.

Answer:

D. credit to Service Revenue of $4,000.