Response to the following problem:
Prepare any necessary adjusting entries at December 31, 2011, for Yacht Company's year-end financial statements for each of the following separate transactions and events.
1. Yacht Company records an adjusting entry for $2,000,000 of previously unrecorded cash sales (costing $1,000,000) and its sales taxes at a rate of 5%.
2. The company earned $40,000 of $100,000 previously received in advance for services.