Answer :
To journalize the adjusting entry for the accrued fees of $3,700 that have been earned but not yet billed to clients by the end of the year (December 31),
need to make an adjusting entry. This entry recognizes the revenue that has been earned during the period even though the cash has not yet been received. Here are the steps to make the adjusting entry:
1. Identify the Accounts Involved: The accounts involved in this transaction are 'Accounts Receivable' and 'Fees Earned' (or 'Service Revenue').
2. Determine the Amount: The amount to be recorded is $3,700.
3. Record the Adjusting Entry: The adjusting entry will include a debit to 'Accounts Receivable' to reflect the amount owed by clients and a credit to 'Fees Earned' to record the revenue earned.
Here's the journal entry:
[tex]\[\begin{aligned}&\text{Date: December 31}\quad & \text{Debit} & \text{Credit}\ &\text{Accounts Receivable} & \text{{\$3,700}} & \ &\text{Fees Earned} & & \text{{\$3,700}}\ \end{aligned}\][/tex]
Explanation:
- Debit 'Accounts Receivable' for $3,700 to show that clients owe this amount for services provided.
- Credit 'Fees Earned' for $3,700 to recognize the revenue that has been earned during the period.
This accounting entry ensures that the revenue is recorded in the correct accounting period, adhering to the accrual basis of accounting.
Question:- At the end of the current year, 12/31, $3,700 fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees?
