Unearned Revenue}

Irvine Pest Control signed a \(\$ 1,500\)-per-month contract on December 1, 2018, to provide pest control services to rental units owned by Garden Grove Properties. Irvine received six months' service fees in advance on signing the contract.

\section*{Required:}

1. Prepare Irvine's journal entry to record the cash receipt for the first six months.

2. Prepare Irvine's adjușting entry at December 31, 2018.

3. CONCEPTUAL CONNECTION How would the advance payment be reported in Irvine Pest Control's December 31, 2018, statement of financial position? How would the advance payment be reported in Garden Grove Properties' December 31, 2018, statement of financial position?

\section*{Exercise