On May 1,Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 this year to April 30 of the following year.The Cash receipt was recorded as unearned fees and at year-end on December 31,$1,000 of the fees had been earned.The adjusting entry on December 31 would be:

Question

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The adjusting entry is meant to recognize the portion of the unearned fees that have been earned as of year-end. Since $1,000 of the $1,500 has been earned, the entry will involve debiting Unearned Fees (liability account) for $1,000 and crediting Fees Earned (revenue account) for $1,000. This will reduce the liability account and recognize the earned revenue.

On May 1,Sellers Marketing Company Received $1,500 from Franco Marcelli