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On November 1 ATD enters a 1-year contract to provide security for CorpCo's warehouses for...

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Accounting

On November 1 ATD enters a 1-year contract to provide security for CorpCo's warehouses for $12,000 a year and receives the first 3 months' payment at signing.

a. If ATD books the payment as revenue, what adjusting entry must it record at year end? How will its financial statements be misstated if the entry is not recorded.

b. If ATD books the payment as a liability, what adjusting entry must it record at year end? How will its financial statements be misstated if the entry is not recorded?

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