Question

On December 27, a business completed a $400 service that had not yet been billed or recorded as of December 31. Demonstrate the required adjusting entry of the business by completing the following sentence. The required adjusting entry would be to debit the (Unearned revenue/Accounts receivable/Cash/Service revenue) account and (debit/credit) the (Unearned revenue/Accounts receivable/Cash/Service revenue) account.

Answer 1

The required adjusting entry would be to debit the Accounts receivable; credit; service revenue

Explanation:

When a company provides its goods or services for credit, then the amount that is to be received by the company is termed as Accounts Receivable. In the balance sheet of the company, accounts receivable are reported in the current assets section.

The sales that are being reported by a company related to the services that it provides to the customers is referred as service revenue. This can be either billed or unbilled in nature  until receiving the amount. In the example given the services is not yet billed by the company. hence the  required adjusting entry would be to debit the Accounts receivable and credit the service revenue.