On May 1, 2014, Joe’s Computing negotiated a one-year contract to provide services for $8,400. The company received 25% of the payment upon receipt of the contract and will receive the remainder upon completion of the contract. Joe’s Computing will do an equal amount of work on the contract each month. The company has no other outstanding contracts.
a. Journalize the required entry to record the May 1 transaction.
b. Journalize the adjusting entry for the year ended December 31, 2014.