On December 1, 2019, Carrie's Day Care receives $ 2 comma 700 in advance for an agreement to care for Susan's children for the months of December, January, and February. Carrie's Day Care will make an adjusting entry on December 31, 2019 to:

Unearned Revenue $900 (debit)

Revenue $900 (credit)

Explanation:

On 1 December Carrie's Day Care recorded Unearned Revenue of $2,700 the entry is as follows ;

Cash $2,700 (debit)

Unearned Revenue $2,700 (credit)

By end of the first month (31 December) one month`s revenue will have been earned and the unearned revenue balance decreases. The entries are as follows :

Unearned Revenue $900 (debit)

Revenue $900 (credit)

Calculation : December Revenue = 1/3 × $2,700 = $900

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