Question

On the last day of December 2021, Coaster Trucks entered into a transaction that resulted in a receipt of $300,000 cash in advance related to services that will be provided during January 2022. During December of 2021, the company also performed $165,000 of services which were neither billed nor paid. Prior to December adjustments and before these two transactions were recorded, the company’s trial balance showed service revenue of $1,425,790 at December 31, 2021. There are no other prepaid services yet to be delivered, and during the month all outstanding accounts receivable from prior months were collected.1. If Camrey's trucks makes the appropirate adjusting entry, how much will service revenue will be reflected on the december 31, 2021 income statement?
2. If Camrey's Trucks makes the appropriate adjusting entry, how much will be reported on the December 31, 2021 Balance sheet as unearned revenue?
3. If Camrey's turcks make the appropriate adjusting entry, how much will be reported on the December 31, 2022 Balance sheet as accounts receivable?

Answer 1

Answer:

1. $1,590,790
2. $300,000
3. $165,000

Explanation:

1. The company performed services but did not record them. Those services were for 2021 and so should be counted in 2021's income statement.

= 1,425,790 + 165,000

= $‭1,590,790‬

2. Coaster Trucks received $300,000 even though they have not yet provided the services for it.

The Unearned revenue = $300,000

3. Coaster Company had performed services worth $165,000 that were neither billed nor paid for. When they record t, it will be owed to them so it will be an Account Receivable.

Accounts Receivable = $165,000