The adjusting entry to be made at the end of the accounting period includes a debit to Unearned revenue of $500 and a credit to Revenue for the same amount. According to the accrual accounting technique, revenues are recorded at the time of the transaction rather than when the payment is received. After receiving $800 in advance services, with $300 worth of services outstanding, the service amount performed amounts to $800 - $300 = $500.
No, this arrangement violates the AICPA Code of Conduct. The firm's fee is entirely contingent upon the success of their work, whereas the Code permits compensation based on effort but not solely on outcome. Since there is no guaranteed fee unless tax credits are awarded, this opens the door to potential misconduct by the firm. To prevent such risks, the Code disallows fees that depend exclusively on the achievement of tax credits.
To work this out, we have to reverse the steps:
After the July discount of 50%, the price of the jeans is $25.50
Thus, the original price before this discount was 2 * $22.50 = $45
In June, the cost was decreased by 25%.
45 ------------------75%
x --------------------100 %
45: x = 75: 100
45 * 100 = 75 x
4,500 = 75 x
x = 4,500: 75
x = $60
Finally, in May the jeans were priced at 250% of their wholesale cost.
60 ----------------- 250%
x -------------------100 %
60: x = 250: 100
6,000 = 250x
x = 6,000: 250
x = $24
Conclusion: The wholesale cost of the jeans was $24.
