S3-14. (Learning Objective 3: Adjusting the accounts) Richmond, Inc., collects cash from customers two ways:

a. Accrued revenue. Some customers pay Richmond after Richmond has performed services for the customer. During 20X6, Richmond performed services worth $75,000 on account and later received cash of $50,000 on account from these customers.

b. Unearned revenue. A few customers pay Richmond in advance, and Richmond later performs the service for the customer. During 20X6, Richmond collected $8,000 cash in advance and later earned $3,600 of this amount.

Journalize for Richmond

a. Earning service revenue of $75,000 on account and then collecting $45,000 on account.

b. Receiving $8,000 in advance and then earning $3,600 as service revenue.