At the beginning of the year, Modish Advertising owed customers $2,400 for unearned revenue collected in advance. During the year, Modish received advance cash receipts of $9,400 and earned $15,000 of service revenue (exclusive of any amount earned from advance payments). At year-end, the liability for unearned revenue is $2,800 and unadjusted service revenue is $15,000.

Requirements:

Record the adjusting entry assuming that Modish 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 Modish 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.)

Options for Accounts and Explanation: Accounts payable, accounts receivable, cash, office supplies, rent expense, salaries expense, salaries payable, service revenue, supplies expense, unearned revenue.

1. Record the adjusting entry assuming that Modish 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. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a revenue account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance in the Unearned Revenue T-account and the additional unearned revenue in the Service Revenue T-account. 2. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same