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.
