On May 1, Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed 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 include:
A) A debit to Unearned Fees for $500.
B) A credit to Unearned Fees for $500.
C) A credit to Earned Fees for $1,000.
D) A debit to Earned Fees for $1,000.
E) A debit to Earned Fees for $500.

Question

Quizplus · Accepted Answer

The adjusting entry should recognize the $1,000 of fees that have been earned by debiting Unearned Fees and crediting Earned Fees.

On May 1, Giltus Advertising Company Received $1,500 from Julie