At the end of the current year, $59,500 of fees have been earned but have not been billed to clients. a. Journalize the adjusting entry to record the accrued fees. If an amount box does not require an entry, leave it blank. b. If the cash basis rather than the accrual basis had been used, would an adjusting entry have been necessary?

Question

Jamie Frye

Business

30 November, 13:42

At the end of the current year, $59,500 of fees have been earned but have not been billed to clients. a. Journalize the adjusting entry to record the accrued fees. If an amount box does not require an entry, leave it blank. b. If the cash basis rather than the accrual basis had been used, would an adjusting entry have been necessary?

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Answers (1)

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Avery Curtis · Answer 1

a.

Cash $59,500 (debit)

Deferred Revenue $59,500 (credit)

Being Fees Earned But not Billed to Customers

b.

Yes adjusting entry would be necessary. Because there has been movement of cash

Explanation:

The Accrual Principle states that transactions are recorded as they occur not as they are paid.

The Effect of the transaction in the question is to Increase the Assets of Cash while Recognizing the Liability that the company has to the customer in Deferred Revenue.

At the later date when the Company Bills the Clients, the Deferred Revenue would be Eliminated and the Revenue Account be Recognized.