On January 1, a customer paid X Company $26,700 in advance for cleaning services
ID: 2394867 • Letter: O
Question
On January 1, a customer paid X Company $26,700 in advance for cleaning services. The cleaning was going to be done once in January, once in February, once in March, and once in April, so the payment was recorded as Deferred Revenue. What will be the result of the adjusting entry on January 31?
a $6,675 decrease in the Cash account on the Balance Sheet
a $6,675 increase in the Cash account on the Balance Sheet
revenue of $6,675 reported on the Income Statement
a $6,675 decrease in the Retained Earnings account on the Balance Sheet
a balance of $6,675 in the Deferred Revenue account on the Balance Sheet
a $6,675 increase in the Deferred Revenue account on the Balance Sheet
Explanation / Answer
Revenue of $6,675 reported on the Income Statement. Deferred Revenue account on the Balance Sheet will be decreased by $6675