The accounting records for Social Event Planning Services include the following select unadjusted balances on December 31, 2018: Salaries Expense, $6,000; Service Revenue: $18,000; Unearned Revenue, $400; Supplies Expense, $600; Rent Expense, $300; Depreciation Expense-Equipment, $200. During December, the company worked with a new client and provided event planning services for an upcoming event. It will receive the full amount of $1,800 when the event is completed in January 2019. As of the end of December 2018, it performed one-third of the services covered by the contract. The company made the accrual adjustments. The balance of Service Revenue, as shown on the adjusted trial balance, should be a ________.
A) debit balance of $19,800
B) credit balance of $18,000
C) debit balance of $1,800
D) credit balance of $18,600

Question

Quizplus · Accepted Answer

- Service Revenue on the unadjusted trial balance is $18,000. 
- The company provided one-third of the services covered by the contract, which means they have earned $18,000/3 = $6,000 in December. 
- They will receive the full amount of $1,800 in January 2019. 
- The accrual adjustment requires recognizing the $6,000 earned in December as Service Revenue and deferring the $1,800 as Unearned Revenue. 
- Therefore, the adjusted Service Revenue balance is $18,000 + $6,000 - $1,800 = $22,200. 
- Since the company had no other adjusting entries affecting Service Revenue, the balance is a credit balance. 
- Therefore, the correct answer is D) credit balance of $18,600.

The Accounting Records for Social Event Planning Services Include the Following