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23 March, 07:56

a. Tao Co. receives $10,000 cash in advance for four months of evenly planned legal services beginning on October 1. Tao records it by debiting Cash and crediting Unearned Revenue both for $10,000. It is now December 31, and Tao has provided legal services as planned. What adjusting entry should Tao make to account for the work performed from October 1 through December 31

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  1. 23 March, 11:00
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    Dr unearned revenue $7,500

    Cr legal services revenue $7,500

    Being recognition of legal services revenue earned

    Explanation:

    The appropriate adjusting entry now would be to recognize the revenue earned from October 1 through to December 31.

    Revenue=$10,000*3/4=$7,500

    The $7,500 would be debited to unearned revenue account as it is now earned while the legal services revenue account would be credited for the same amount.
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Home » Business » a. Tao Co. receives $10,000 cash in advance for four months of evenly planned legal services beginning on October 1. Tao records it by debiting Cash and crediting Unearned Revenue both for $10,000.
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