On April 1, 2019, Orbit Services received $7,000 in advance of performing the se

Question

On April 1, 2019, Orbit Services received $7,000 in advance of performing the services from a customer for three months of service — April, May and June. What would be the journal entry to adjust the accounts at the end of May? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

A. Debit Unearned Revenue $7,000 and credit Service Revenue $7,000.

B. Debit Service Revenue $2,333, and credit Unearned Revenue $2,333.

C. Debit Unearned Revenue $4,667, and credit Service Revenue $4,667.

D. Debit Service Revenue $4,667 and credit Accounts Receivable $4,667.

Explanation / Answer

Journal entry on April 1, 2019

Journal entry at the end of May

The answer is C.

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