At the beginning of the year, BlahBlah Advertising owed customers $3,200 for unearned revenue collected in advance. During the year, BlahBlah Advertising received advance cash receipts of $7,500 and earned $45,000 of service revenue (exclusive of any amount earned from advance payments). At year-end, the liability for unearned revenue is $3,800 and unadjusted service revenue is $45,000.

1. Record the adjusting entry assuming that BlahBlah records the cash receipt of unearned revenue by initially crediting a liability account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance and additional unearned revenue in the Unearned Revenue T-account.

Begin by recording the adjusting entry assuming that BlahBlah records unearned revenue by initially crediting a liability account. (Record debits first, then credits. Select the explanation on the last line of the journal entry.)