Question

1. Exercise 8-69
   Unearned Revenue

   Jennifer's Landscaping Services signed a $400-per-month contract on November 1, 2019, to provide plant watering services for Lola Inc.'s office buildings. Jennifer's received 4 months' service fees in advance on signing the contract.

   Required:

   1. Prepare Jennifer's journal entry to record the cash receipt for the first 4 months.

   Nov. 1	Cash
   	Accounts Payable
   	(Record receipt of payment for services not yet performed)

   
   

   1. Revenues are recognizes when earned. We talked about this in Chapter 5.

   2. Prepare Jennifer's adjusting entry at December 31, 2019.

   Dec. 31	Accounts Payable
   	Unearned Sales Revenue
   	(Record recognition of revenue)

   
   

   2. Revenue is not recorded until earned.

   3. Conceptual Connection: How would the advance payment [account(s) and amount(s)] be reported in Jennifer's December 31, 2019, balance sheet?

   Unearned sales revenue in the amount of $ would appear among Jennifer's current liabilities .

   How would the advance payment [account(s) and amount(s)] be reported in Lola's December 31, 2019, balance sheet?

   A prepaid asset in the amount of $ would appear among Lola's current assets .

Answer 1

In the book of jennifer

Date	Particular	Debit	Credit
1Nov 2019	Cash A/C	$1600
	To Unearned Revenue		$1600
	Being Advance revenue Received
DEC 31,2019	Unearned Revenue	$1600
	To Revenue A/c		$1600
	Being Revenue Recognised

3.As Per accounting Principle Unarned revenue is not treated as revenue untill service /Goods is not delivered here on Nov 1st 2019 Jeniffer received advance of $1600 Its was liability for jennifer so it was shown as below in balancesheet

Particulars	NOV2019
Current Liability
Unearned revenue	$1600

but after delivering service it will be recognised as revenue and recorded in Income statement

In lola's account journal entry will be

Prepaid expenses Ac Dr      $1600

           To Cash A/C                       1600

In the book of lola

Balnce sheet as on for november

PARTICULAR	31st dec2019
Current Asset
Prepaid Expenses	$1600

but after receving service advance payment will be adjusted and not shown as prepaid expenses in balncesheet.