Question

The balance in the unearned fees account, before adjustment at the end of the year, is $95,500. Of these fees, $82,760 have been earned. In addition, $32,640 of fees have been earned but have not been billed.
Journalize the December 31 adjusting entries (a) to adjust the unearned fees account and (b) to record the accrued fees. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS
General Ledger
ASSETS
11   Cash
12   Accounts Receivable
13   Supplies
14   Prepaid Insurance
15   Land
16   Equipment
17   Accumulated Depreciation-Equipment
LIABILITIES
21   Accounts Payable
22   Unearned Fees
23   Salaries Payable
24   Taxes Payable
EQUITY
31   Common Stock
32   Retained Earnings
33   Dividends
REVENUE
41   Fees Earned
EXPENSES
51   Advertising Expense
52   Insurance Expense
53   Rent Expense
54   Salary Expense
55   Supplies Expense
56   Utilities Expense
57   Depreciation Expense
59   Miscellaneous Expense

Answer 1

Solution

Adjusting entries –

1. To adjust the unearned fees account:

		Journal				Accounting Equation
1	Date	Description	Post. Ref	Debit	Credit	Assets	Liabilities	Equity
2	31-Dec	Unearned Revenue		$82,760			($82,760)
3		Fees Earned			$82,760			$82,760
		(To recognize earned portion of unearned revenue)

1. To record accrued fees:

		Journal				Accounting Equation
1	Date	Description	Post. Ref	Debit	Credit	Assets	Liabilities	Equity
2	31-Dec	Accounts Receivable		$32,640		$32,640
3		Fees Earned			$32,640			$32,640
		(To record the accrued fees)