Olney Cleaning Company had the following items that require adjustment at year end.
a. For one cleaning contract, $14,520 cash was received in advance. The cash was credited to Unearned Service Revenue upon receipt. At year end, $1,210 of the service revenue was still unearned.
b. For another cleaning contract, $9,840 cash was received in advance and credited to Unearned Service Revenue upon receipt. At year end, $3,280 of the services had been provided.
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 Service Revenue at December 31 related to the two cleaning contracts?