QS $3-11($Algo$)$ Adjusting for unearned $($deferred$)$ revenues LO P$2$

$1$

For each separate case below, follow the three$-$step process for adjusting the unearned revenue liability account at December $31.$

Step $1$: Determine what the current account balance equals.

Step $2$: Determine what the current account balance should equal.

Step $3$: Record the December $31$ adjusting entry to get from step $1$ to step $2.$

Assume no other adjusting entries are made during the year.

a$.$ Tao $Co.$ receives $$11,300$ cash in advance for four months of evenly planned legal services beginning on October $1.$ Tao records it by debiting Cash and crediting Unearned Revenue both for $$11,300.$ It is now December $31,$ and Tao has provided legal services as planned. What adjusting entry should Tao make to account for the work performed from October $1$ through December $31?$

b$.$ Caden started a new publication called Contest News. Its subscribers pay $$36$ to receive $12$ monthly issues. With every new subscriber, Caden debits Cash and credits Unearned Subscription Revenue for the amounts received. The company has $100$ new subscribers as of July $1.$ It sends Contest News to each of these subscribers every month from July through December. Assuming no changes in subscribers, prepare the year$-$end journal entry that Caden must make as of December $31$ to adjust the Subscription Revenue account and the Uneamed Subscription Revenue account.