Question

The balance in the unearned fees account, before adjustment at the end of the year, is $900,000. Of these fees, $775,000 have been earned. In addition, $289,500 of fees have been earned but not billed to clients. What are the adjustments (a) to adjust the unearned fees account and (b) to record the accrued fees

Answer 1

Answer:

(a) Debit Unearned fees account  $775,000

    Credit Fees revenue account    $775,000

(b)  Debit Unbilled receivables   $289,500

     Credit Fees revenue account    $289,500

Explanation:

When fees are received in advance but yet to be earned, a debit is posted to cash account and a credit to unearned fees. When revenue is earned, credit revenue and debit unearned fees.

As such, given that before adjustment at the end of the year, is $900,000. Of these fees, $775,000 have been earned. Adjusting entries required

Debit Unearned fees account  $775,000

Credit Fees revenue account    $775,000

Being entries to record revenue earned.

Also given that $289,500 of fees have been earned but not billed to clients, entries required are

Debit Unbilled receivables   $289,500

Credit Fees revenue account    $289,500

Being entries to accrue for revenue earned but yet to be billed.