Deferred Revenue Adjusting Entries Olney Cleaning Company had the following items that require adjustment at year end. a. For one cleaning contract, $10,500 cash was received in advance. The cash was credited to Unearned Service Revenue upon receipt. At year end, $1,260 of the service revenue was still unearned. b. For another cleaning contract, $8,100 cash was received in advance and credited to Unearned Service Revenue upon receipt. At year end, $2,810 of the services had been provided. Required: 1. Prepare the adjusting journal entries needed at December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Dec. 31 2. What is the effect on the financial statements if these adjusting entries are not made? In both of these cases, a liability (unearned service revenue) was originally created when cash was prior to the performance obligation being satisfied (prior to the revenue being earned). The adjusting entries period. If these adjusting entries were not made, revenue would be addition, the of revenue would result in an the previously created liability by the amount of revenue earned during the stockholders' equity will also be and liabilities (unearned revenue) would be . In of net income. Finally, because revenue is then closed to Retained Earnings