DEFERRED REVENUE ADJUSTING ENTRIES Olney Cleaning Company had the following items that require adjustment at year-end.

a. For one cleaning contract, $14,000 cash was received in advance. The cash was credited to unearned revenue upon receipt. At year-end, $3,750 of the service revenue was still unearned.

b. For another cleaning contract, $9,500 cash was received in advance and credited to unearned revenue upon receipt. At year-end, $4,300 of the services had been provided.
Required:
. Prepare the adjusting journal entries needed at December 31.
. What is the effect on the financial statements if these adjusting entries are not made?
. What is the balance in unearned revenue at December 31 related to the two cleaning contracts?
Cornerstone Exercise