Book 2 - Chapter 5

5-1, continued

Information Example

  The key
  information
  type is . . .

  and to determine the total
  revenue earned to
  decrease the liability . . .

  6. Suffolk Printing Partnership received a $10,000
      advance payment on February 1 to print 5,000
      calendars. By December 31, year end, 3,500
      calendars were supplied to customers who made
      the prepayment.

the unearned
revenue per
unit,

	calculate the unearned revenue per unit (per calendar)
	multiply by the number of units provided

  7. Queensborough Corporation’s Unearned Revenue
      account showed an $8,000 balance at year end.
      $7,000 of the amount is for the last seven months’
      rent. The remainder is a deposit for the last month’s
      rent of a rental agreement that expires next year.

the unearned
revenue that
was earned,

$7,000 is the amount earned
during the last seven months
of the current period

  8. On September 1, Kingsborough Banking Company
      made a loan that required the customer to prepay six
      months’ interest in the amount of $9,000. On
      December 31, year end, the Kingsborough ledger
      showed:

Deferred Interest Revenue
	9,000

Interest Revenue
	200,000

the unearned
revenue per unit,
(per month),

	calculate the unearned revenue per month
	multiply by the number of months earned

  9. On March 22, Suny Consulting Company received
      a $14,000 advance payment from a client. By June
      30, year end, $1,500 of the advance was still not
      earned.

the unearned
revenue actually
remaining,

subtract the amount remaining
from the unadjusted trial
balance amount

10. On March 22, Suny Consulting Company received
a $14,000 advance payment from a client. By June
30, year end, $12,500 of the advance had been earned.

the unearned
revenue that
was earned,

use the dollar amount given

11. At year end, Hudson Valley Test Labs, Inc. has a
     Deferred Revenue account that shows a beginning
     balance of $50,000 from a prior year’s five-month
     service contract. During the current year, the
     company received an advance payment of $200,000
     to test 1,000 units. This was also recorded in
     Deferred Revenue. The company tested 212 units.

Combination:
	the unearned revenue that was earned,
	the unearned revenue per unit,

	the beginning balance was fully earned.
	calculate the unearned revenue per unit (per test) and multiply by the number of units

Learning Goal 5, continued

SOLUTIONS

Section I · Adjusting the Accounts

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