For each separate case below, follow the three-step process for adjusting the unearned revenue liability account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Unearned Rent Revenue. The Krug Company collected $6,000 rent in advance on November 1, debiting Cash and crediting Unearned Rent Revenue. The tenant was paying 12 months’ rent in advance and occupancy began November 1. b. Unearned Services Revenue. The company charges $75 per insect treatment. A customer paid $300 on October 1 in advance for four treatments, which was recorded with a debit to Cash and a credit to Unearned Services Revenue. At year-end, the company has applied three treatments for the customer. c. Unearned Rent Revenue. On September 1, a client paid the company $24,000 cash for six months of rent in advance (the client leased a building and took occupancy immediately). The company recorded the cash as Unearned Rent Revenue.

Question

For each separate case below, follow the three-step process for adjusting the unearned revenue liability
account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine
what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get
from step 1 to step 2. Assume no other adjusting entries are made during the year.
a. Unearned Rent Revenue. The Krug Company collected $6,000 rent in advance on November 1, debiting
Cash and crediting Unearned Rent Revenue. The tenant was paying 12 months’ rent in advance
and occupancy began November 1.
b. Unearned Services Revenue. The company charges $75 per insect treatment. A customer paid $300
on October 1 in advance for four treatments, which was recorded with a debit to Cash and a credit to
Unearned Services Revenue. At year-end, the company has applied three treatments for the customer.
c. Unearned Rent Revenue. On September 1, a client paid the company $24,000 cash for six months of
rent in advance (the client leased a building and took occupancy immediately). The company recorded
the cash as Unearned Rent Revenue.

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