On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately.
- Assuming adjustments are only made at year-end, What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?
A) debit Unearned Fees, $387; credit Fees Earned, $387.
B) debit Unearned Fees, $1,161; credit Fees Earned, $1,161.
C) debit Unearned Fees, $1,548; credit Fees Earned, $1,548.
D) debit Unearned Fees, $129; credit Fees Earned, $129.
E) debit Unearned Fees, $516; credit Fees Earned, $516.

Question

Quizplus · Accepted Answer

The adjusting entry is to debit Unearned Fees for the amount of fees earned during the year and credit Fees Earned for the same amount. In this case, the fees earned during the first year are $1,548 - $387 = $1,161. Therefore, the adjusting entry is to debit Unearned Fees for $1,161 and credit Fees Earned for $1,161.

On April 1, Griffith Publishing Company Received $1,548 from Santa