A roofing company collects fees when jobs are complete.The work for one customer,whose job was bid at $3,000,has been completed as of December 31,but the customer has not yet been billed.Assuming adjustments are only made at year-end,what is the adjusting entry the company would need to make on December 31,the calendar year-end?

Question

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The company has completed the job, but has not yet billed the customer for the $3,000 of fees. This means that the company has earned the revenue, but has not yet recorded it because it is still an account receivable. Therefore, on December 31, the company needs to adjust its accounts by debiting accounts receivable for $3,000 (to record the revenue that has been earned) and crediting roofing fees revenue for $3,000 (to balance the entry). This is option C.

A Roofing Company Collects Fees When Jobs Are Complete