An entity is a resort located in Palawan. The entity collects cash when guests make a reservation. During December 2020, the entity collected P600,000 of cash and recorded the receipt by recognizing unearned revenue. The entity had earned one-third of this amount and the other two-thirds will be earned during January 2021. What is the impact of the adjusting entry on December 31, 2020?
An entity is a resort located in Palawan. The entity collects cash when guests make a reservation. During December 2020, the entity collected P600,000 of cash and recorded the receipt by recognizing unearned revenue. The entity had earned one-third of this amount and the other two-thirds will be earned during January 2021. What is the impact of the adjusting entry on December 31, 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An entity is a resort located in Palawan. The entity collects cash when guests make a reservation. During December 2020, the entity collected P600,000 of cash and recorded the receipt by recognizing unearned revenue. The entity had earned one-third of this amount and the other two-thirds will be earned during January 2021. What is the impact of the
a. 400,000 increase in equity
b. 200,000 decrease in liability
c. 600,000 increase in asset
d. 200,000 decrease in equity
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