Question

During the year ended December 31, 2015, clients paid fees in advance for accounting services amounting to $45,000. These fees were recorded in an account called Unearned Accounting Service Revenue. If $30,000 of these fees are still unearned on December 31, 2015, what is the required December 31 adjusting entry amount?

a) Debit Unearned Accounting Service Revenue $30,000, Credit Accounting Service Revenue $30,000
b) Debit Unearned Accounting Service Revenue $15,000, Credit Accounting Service Revenue $15,000
c) Debit Accounting Service Revenue $15,000, Credit Unearned Accounting Service Revenue $15,000
d) Debit Accounting Service Revenue $30,000, Credit Unearned Accounting Service Revenue $30,000

Answer 1

The required December 31 adjusting entry for the unearned accounting service revenue is a) Debit Unearned Accounting Service Revenue $30,000, Credit Accounting Service Revenue $30,000.

This correct answer is a)

Step-by-step explanation:

The required adjusting entry on December 31 for the unearned accounting service revenue is option a) Debit Unearned Accounting Service Revenue $30,000, Credit Accounting Service Revenue $30,000.

Since $30,000 of the fees are still unearned, we need to debit the Unearned Accounting Service Revenue account to reduce the balance by $30,000.

At the same time, we will credit the Accounting Service Revenue account to recognize that $30,000 of the previously received fees is now earned.

This correct answer is a)