Adjusting Entries for Unearned Revenue (Liability Method and Income Method)

Adjusting Entries for Unearned Revenue (Liability Method and Income Method) Unearned Revenue - When the business entity receives payment befor providing its customers with goods and services, the amounts received are recorded in the unearned revenue account (liability method). When the goods or services are provided to the customer, the unearned revenue is reduced and income is recognized. Source: Basic Financial Accounting and Reporting , Win Ballada 1. Cabigting Company received P24,000 representing advance payment for rental of an office space for 6 months. Assuming that Cabigting recorded the said amount as unearned revenue and the lease is to start on March 1, record the adjusting entry to recognize the revenue earned for March. 2. Cabigting Company received P24,000 representing advance payment for rental of an office space for 6 months. Assuming that Cabigting recorded the said amount as rental revenue and the lease is to start on March 1, record the adjusting entry to recognize the revenue earned for March. 3. On July 1, 2020, Marasigan Cmpany received a P48,000 check for 2 years’ rent paid in advance. Prepare the adjusting entry for the month ended, July 31, 2020. 4. On July 1, 2020, Marasigan Cmpany received a P48,000 check for 2 years’ rent paid in advance. Prepare the adjusting entry for the year ended, December 31, 2020. Thank you for watching! #abm #accounting #adjusting entries