Question

A roofing company collects fees when jobs are complete. The work for one customer, whose job was bid at $4,600, 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?

Answer 1

Answer: As of December 31, the company must make an adjustment that recognizes a credit receivable for the work performed and as a counterpart will have a positive result account since it is an income for the provision of a service. The registration should be:

---------------------------------------------------------------------------------

Debit Accounts Receivable $4600

Credit Roofing Fees Revenue $4600

----------------------------------------------------------------------------------