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20 February, 07:12

Suppose a customer rents a vehicle for three months from Commodores Rental on November 1, paying $3,750 ($1,250/month). Record the necessary entries in the Journal Entry Worksheet. Calculate the year-end adjusted balances of the Deferred Revenue and Service Revenue accounts (assuming the balance of Deferred Revenue at the beginning of the year is $0).

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  1. 20 February, 09:37
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    Deferred Revenue $1,250

    Explanation:

    Journal entry Dec 31:

    Dr. Deferred Revenue $2,500

    Cr. Service Revenue $2,500

    To record adjusting entry for the rental service incurred from Nov 1 to Dec 31

    Adjusted balances Dec 31:

    In the Balance sheet,

    Deferred Revenue $1,250

    In the income statement,

    Service Revenue $2,500 plus all other services revenue for the year
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