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

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Business

Arielle Mcneil

24 February, 07:11

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

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Saniya Parrish · Answer 1

(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.