Final answer:
The question relates to the proper accounting entry for advance payment received for services not yet rendered. The cash received is recorded as a liability under 'unearned fees', and revenue is recognized only when the services are performed.
Step-by-step explanation:
The recording of receiving cash from clients as an advance payment for services that are to be provided in the future involves recognizing the cash received as a liability rather than revenue. This liability is referred to as unearned fees and is recorded because the company has the obligation to perform services for this payment in the future. An appropriate journal entry for this transaction would be a debit to Cash for $4,500 and a credit to Unearned Fees for $4,500. The double-entry accounting system ensures that the accounting equation remains in balance after this transaction.
Once the services are actually performed, the company would then recognize the revenue. This would involve another journal entry where Unearned Fees would be debited to decrease the liability, and Service Revenue (or a similar account) would be credited to record the earned revenue. Therefore, the accounting entries ensure correct and professional financial reporting.