Olney Cleaning Company had the following items that require adjustment at year-end. a. For one cleaning contract,

Question:

Olney Cleaning Company had the following items that require adjustment at year-end.
a. For one cleaning contract, $14,000 cash was received in advance. The cash was credited to unearned revenue upon receipt. At year-end, $3,750 of the service revenue was still unearned.
b. For another cleaning contract, $9,500 cash was received in advance and credited to unearned revenue upon receipt. At year-end, $4,300 of the services had been provided.

Required:
1. Prepare the adjusting journal entries needed at December 31.
2. What is the effect on the if these adjusting entries are not made?
3. What is the balance in unearned revenue at December 31 related to the two cleaning contracts?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...