Question

On July 1, 2019, the Renaissance Hotel collected a deposit of $1,335 from a customer for a banquet room and catering services for a wedding which will occur on June 30, 2021, the market rate of interest is 6%.

Required:

1. Record the collection of the cash on 7/1/19.
2. Record any required adjusting entries for December 31, 2019 and 2020.
3. Record the recognition of revenue on June 20, 2021.

Answer 1

Solution:

Journal Entries - Renaissance Hotel
Date	Particulars	Debit	Credit
1-Jul-19	Cash Dr	$1,335.00
	To Unearned service revenue		$1,335.00
	(To record advance collection from customer)
31-Dec-19	Interest expense Dr ($1,335*6%*6/12)	$40.00
	To Unearned service revenue		$40.00
	(To record adjusting entry for interest)
31-Dec-20	Interest expense Dr [($1,335*6%*6/12) + ($1,415*6%*6/12)]	$82.00
	To Unearned service revenue		$82.00
	(To record adjusting entry for interest)
20-Jun-21	Unearnend Service revenue Dr	$1,457.00
	Interest expense Dr	$43.00
	To Service revenue		$1,500.00
	(To record service revenue)