on december 1, 2025, carries day care receives $3,900 in advance for an agreement to care for susans…

on december 1, 2025, carries day care receives $3,900 in advance for an agreement to care for susans children for the months of december, january, and february. carries day care will make an adjusting entry on december 31, 2025 to:\n\na. credit prepaid revenue for $2,600.\nb. credit revenue for $3,900.\nc. debit unearned revenue for $1,300.\nd. credit revenue for $2,600.

on december 1, 2025, carries day care receives $3,900 in advance for an agreement to care for susans children for the months of december, january, and february. carries day care will make an adjusting entry on december 31, 2025 to:\n\na. credit prepaid revenue for $2,600.\nb. credit revenue for $3,900.\nc. debit unearned revenue for $1,300.\nd. credit revenue for $2,600.

Answer

Explanation:

Step1: Calculate monthly revenue

Total amount received = $3,900 for 3 months. Monthly revenue = $\frac{3900}{3}=1300$.

Step2: Determine revenue for December

December is one month. Revenue for December = $1300$.

Step3: Analyze adjusting entry

When revenue is earned (December), we debit Unearned Revenue (liability decreases) and credit Revenue (revenue increases).

Answer:

C. debit Unearned Revenue for $1,300.