Requirement: Make the Journal Entries for Both of the Following

question 163

Essay

Requirement: Make the journal entries for both of the following:
(a) On December 1, $18,000 was received for a service contract to be performed from December 1 through until April 30.
(b) If the service work for this contract is performed evenly and on a regular basis throughout this period, prepare the adjusting journal entry as of year-end, December 31.

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Definitions:

Short-Term Debt

Loans or borrowings that are due for repayment within a short timeframe, typically within one year, used for immediate financing needs.

Retained Earnings

The portion of net income not distributed as dividends to shareholders, but retained by the company for reinvestment.

MACRS 3-Year Class

A category under the Modified Accelerated Cost Recovery System (MACRS) for depreciating certain types of business property over three years.

Amortized

Amortization is the process of spreading out a loan into a series of fixed payments over time, covering both principal and interest.