On February 1, Charlie Walden Law Firm contracted to provide 3,000 of legal services for the next four months and received 3,000 cash from the client.Assuming Walden records deferred revenues using the alternative treatment, what would be the adjusting entry recorded on February 28? A. D

To determine the adjusting entry for the deferred revenue, we need to calculate the portion of the $3,000 that has been earned over the four-month period.<br /><br />Given:<br />- Total contract amount: $3,000<br />- Contract duration: 4 months (February 1 to May 31)<br /><br />The revenue earned per month is:<br />\[ \text{Revenue per month} = \frac{\$3,000}{4} = \$750 \]<br /><br />By February 28, one month of the contract has been completed, so the revenue earned is:<br />\[ \text{Revenue earned by February 28} = \$750 \]<br /><br />The adjusting entry would be to recognize this amount as revenue and decrease the deferred revenue (liability).<br /><br />**Adjusting Entry:**<br />\[ \text{Debit: Deferred Revenue} \quad \$750 \]<br />\[ \text{Credit: Service Revenue} \quad \$750 \]<br /><br />This entry ensures that the revenue earned during February is recognized in the current period, and the liability for the unearned portion is reduced accordingly.