Splish Splash Arts offers music and dance lessons. Splish Splash prepares annual
ID: 2338467 • Letter: S
Question
Splish Splash Arts offers music and dance lessons. Splish Splash prepares annual financial statements and has a December 31, 2017, year-end.
a) On september 1, collects 15,000 cash for dance lessons running from September 1, 2017 to december 31, 2017.
b) October 1, Collects 5,000 (2,500 per month) cash to rent it's performance stage for the full month of December 2017 and January 2018
c) October 1, 2017 collects 8,000 cash for four months of music lessons. The lessons run from October 1, 2017 to January 31, 2018.
Required: For each transaction, record the initial journal entry and the adjusting entry required on December 31, ,2017.
Explanation / Answer
Answer
Initial Journal Entry
Adjusting Journal Entry
Date
Accounts title
Debit
Credit
Date
Accounts title
Debit
Credit
Sep-01
Cash
$ 15,000.00
31-Dec
Unearned Service Revenue
$ 15,000.00
Unearned Service Revenue
$ 15,000.00
Service Revenue
$ 15,000.00
(Revenue received in advance)
(Amount of revenue earned during the period)
Oct-01
Cash
$ 5,000.00
31-Dec
Unearned Rent Revenue
$ 2,500.00
Unearned Rent Revenue
$ 5,000.00
Rent Revenue
$ 2,500.00
(Rent received for Dec and Jan)
(Rent revenue of December now earned)
Oct-01
Cash
$ 8,000.00
Unearned Service Revenue
$ 8,000.00
31-Dec
Unearned Service Revenue
$ 6,000.00
(Revenue received in advance)
Service Revenue
$ 6,000.00
(Revenue earned for 3 months: Oct, Jov and Dec, till 31 Dec)
Initial Journal Entry
Adjusting Journal Entry
Date
Accounts title
Debit
Credit
Date
Accounts title
Debit
Credit
Sep-01
Cash
$ 15,000.00
31-Dec
Unearned Service Revenue
$ 15,000.00
Unearned Service Revenue
$ 15,000.00
Service Revenue
$ 15,000.00
(Revenue received in advance)
(Amount of revenue earned during the period)
Oct-01
Cash
$ 5,000.00
31-Dec
Unearned Rent Revenue
$ 2,500.00
Unearned Rent Revenue
$ 5,000.00
Rent Revenue
$ 2,500.00
(Rent received for Dec and Jan)
(Rent revenue of December now earned)
Oct-01
Cash
$ 8,000.00
Unearned Service Revenue
$ 8,000.00
31-Dec
Unearned Service Revenue
$ 6,000.00
(Revenue received in advance)
Service Revenue
$ 6,000.00
(Revenue earned for 3 months: Oct, Jov and Dec, till 31 Dec)
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