Question

On December 1, Orenthal Marketing Company received $3,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned fees. The adjusting entry for the year ended December 31 would include Multiple Choice a.a debit to Unearned Fees for $1,800 b.a debit to Earned Fees for $1,800. c.a debit to Earned Fees for $3,600 d.a credt to Eamed Fees for $3,600

Answer 1

Answer:

a.a debit to Unearned Fees for $1,800

Explanation:

The adjusting entry is shown below:

Unearned fees A/c Dr $1,800

     To Earned fees A/c $1,800

(Being the unearned fees is recorded)

The computation is shown below:

= Received amount × number of months  ÷ given months

= $3,600 × 1 months ÷ 2 months

= $1,800

We simply debited the unearned fees and credited the earned fees account for $1,800