For a recent year, microsoft corporation (msft) reported short-term unearned revenue of $23,223 million. for the same year, microsoft also reported total revenues of $93,580 million.

a. assume that microsoft recognized $2,000 million of unearned revenue as revenue during the year, what entry for unearned revenue did microsoft make during the year

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Business

Pranav Ponce

24 June, 14:06

For a recent year, microsoft corporation (msft) reported short-term unearned revenue of $23,223 million. for the same year, microsoft also reported total revenues of $93,580 million.

a. assume that microsoft recognized $2,000 million of unearned revenue as revenue during the year, what entry for unearned revenue did microsoft make during the year

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Ernesto Hart · Answer 1

Given:

short-term unearned revenue of $23,223 million.

total revenues of $93,580 million.

assume that microsoft recognized $2,000 million of unearned revenue as revenue during the year

We only consider two figures in this problem. 1) 23,223 million short-term unearned revenue and the 2,000 million unearned revenue recognized as revenue for this year.

There are two ways of recognizing the unearned revenue and its corresponding adjusting entry is dependent on its initial recognition.

Liability method of Recording Unearned Revenue: (in millions)

Debit Credit

Cash 23,223

Unearned Revenue 23,223

Adjusting entry:

Unearned Revenue 2,000

Service Income 2,000

Income Method of Recording Unearned Revenue

Cash 23,223

Service Income 23,223

Adjusting Entry

Service Income 21,223

Unearned Income 21,223