On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 of the current year to April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. Assuming adjustments are only made at year-end, the adjusting entry on December 31 would be:

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Business

Esteban Silva

31 October, 01:42

On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 of the current year to April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. Assuming adjustments are only made at year-end, the adjusting entry on December 31 would be:

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Moocher · Answer 1

Date Account titles and explanations Debit Credit

December 31 Unearned fees $1,000

Earned fees $1,000

Explanation:

Revenue is only registered when it is undoubtedly received, because of the concept of income recognition. The sum of $1500 is unearned money, because it is merely a credit to deliver the service. $1000 will be registered as salaries at year-end, and the same amount will be deducted from unearned revenue.