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General Accounting Discussions: [Sink] Adjusting Journal Entry

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    • CommentAuthor08cadillac
    • CommentTimeSep 27th 2009 edited
     
    If you provided your customers service in February in which they paid for in January - would you say this is an adusting entry of converting liabilities to revenue and when you make the journal entry you debit Unearned Revenue and credit Service Revenue? Is this correct?
    • CommentAuthorArcSine
    • CommentTimeSep 29th 2009
     
    That's correct. When the customer pays you before you've provided the service, it's recorded as a liability. When the service is provided to the customer, the liability is reclassified to an earned revenue account.
  3.  
    Arcsine you are absolutely right! Nice answer!

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