On December 1, Simpson 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:
A) a credit to Unearned Fees for $1,800.
B) a debit to Earned Fees for $3,600.
C) a debit to Earned Fees for $1,800.
D) a credit to Earned Fees for $3,600.
E) a debit to Unearned Fees for $1,800.

Question

Quizplus · Accepted Answer

The adjusting entry would debit Unearned Fees for $1,800 to recognize the revenue earned for December, as half of the 2-month plan has been completed by December 31.

On December 1, Simpson Marketing Company Received $3,600 from a Customer