Unearned Revenue Adjusting Entries}

Olney Cleaning Company had the following items that require adjustment at year-end:

a. For one cleaning contract, \(\$ 10,500\) cash was received in advance. The cash was credited to unearned revenue upon receipt. At year-end, \(\$ 1,250\) of the service revenue was still unearned.

b. For another cleaning contract, \(\$ 8,300\) cash was received in advance and credited to unearned revenue upon receipt. At year-end, \(\$ 2,700\) of the services had been provided.

\section*{Required:}

1. Prepare the adjusting journal entries needed at December 31 .

2. What is the effect on the financial statements if these adjusting entries are not made?
3. What is the balance in unearned revenue at December 31 related to the two cleaning contracts?
OBJECTIVE 4 CORNERSTONE 3.6 \title{