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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Unearned Sales Revenue

Curtis’s Carpet Cleaning normally charges $90 to clean one room of carpeting. During the holiday season, Curtis offers a promotion to clean the customer’s carpet 10 times at a discounted rate if the customer pays $600 in advance.

Required:

Make the journal entry to record the following transactions.

1. A customer’s prepayment of $600

2. Curtis’s cleaning of the carpet one time

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

Requirement 1:

To prepare:

The journal entry to record the prepayment.

Explanation

The journal entry to record the prepayment is explained as follows:

Curtis’s Carpet Cleaning
Journal Entries
# Account Titles
To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

Requirement 2:

To prepare:

The journal entry to record the revenue.

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