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On September 1, Capitol Maintenance Company contracted to provide monthly maintenance services for the next seven months at a rate of $2,300 per month. The client paid Capitol $16,100 on September 1. The maintenance services began on that date. Assuming Capitol records deferred revenues using the alternative treatment, what would be the adjusting entry recorded on December 31

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Tundexi

Answer:

Debit Unearned Revenue, Credit Service Revenue for $9,200

Explanation:

Date      Account Titles                      Debit     Credit

Sept 1    Cash                                     $16,100

                   Unearned service revenue           $16,100

Dec 31    Unearned service revenue $9,200

                     Service Revenue                          $9,200

                     ($2300 * 4 months)

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