AOTC Corp has adopted ASC 606 in 2016. Due to the adoption AOTC needs to defer the recognition of a portion of their revenue and record such amount as a Contract Liability (Deferred Revenue). AOTC shows three years of Balance sheet on their Financial statements (i.e. 2014, 2015 and 2016). The amount of Contract Liability under ASC 606 at December 31 would be:

Year Deferred Revenue (Contract Liability)

2013 $30,000

2014 $50,000

2015 $60,000

2016 $82,000

Before adoption of ASC 606, AOTC reported:

Statement of Changes in Retained Earnings as Originally Reported:
					2015	2014
	Retained Earnings at January 1				$3,650,000	$3,250,000
	Net Income				$500,000	$400,000
	Retained Earnings at December 31				$4,150,000	$3,650,000

Before considering the adjustment necessary to record the adoption of ASC 606, AOTCs 2016 Net Income would have been $600,000.

Ignore the impact of Income Taxes.

What Journal Entry would AOTC make in its General Ledger at January 1, 2016 to record the impact of adopting ASC 606 in 2016?

	ACCOUNT DESCRIPTION

Provide Journal Entry Description:

*A = Asset, L = Liability, E = Equity, R = Revenue. X = Expense, D = Dividend

(B) Complete the following table showing reconciliation of Net Income as originally reported to Net Income using ASC 606.

			2016	2015	2014
Net Income as Originally Reported / Computed			$600,000	$500,000	$400,000
Describe Adjustments:
Net Income Under ASC 606:
Note: the earliest Year is presented first

Complete the following Table Statement of Changes in Retained Earnings:

			2016	2015	2014
Retained Earnings at January 1				$3,650,000	$3,250,000
Cumulative Effect Adjustment
Beginning Retained Earning as Adjusted
Net Income
Retained Earnings at December 31
Note: the earliest Year is presented first