Question

Great Kids Co. began providing day care for the children of employees of a large corporation on January 15 for an agreed monthly fee of $9,000. The first payment is to be received on February 15. The adjusting entry required by Great Kids Co. on January 30 includes:

Answer 1

A. A credit to Child Care Fees Earned of $4,500.

Explanation:

The journal entry to record this given transaction is given below:

Cash A/c Dr $4,500

To Child Care Fees Earned A/c $4,500

(Being the fees earned is recorded)

As the payment is collected that means cash balance is rise so it debited the cash account and credited the child care fees earned account.

As The monthly fee is $9,000 but we have to determine for 15 days, so it is

= $9,000 ÷ 2

= $4,500