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23 July, 03:26

A roofing company collects fees when jobs are complete. The work for one customer, whose job was bid at $3,400, has been completed as of December 31, but the customer has not yet been billed. Assuming adjustments are only made at year-end, what is the adjusting entry the company would need to make on December 31, the calendar year-end

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  1. 23 July, 07:08
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    Dr Accounts Receivable $3,400

    Cr Roofing Fees Revenue $3,400

    Explanation:

    The revenue must be recognized in the books of accounts when it earned and when the part of contract that the company must fulfill has been fulfilled (Consideration of contract has been delivered). In this case, the consideration of the job was deliverd to the customer in the year hence the revenue must be recognized in the same year and the journal entry would be:

    Dr Accounts Receivable $3,400

    Cr Roofing Fees Revenue $3,400
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