[sw25]

Hi I have this question:

As at 30 June 2008, $11,560 has been paid in advance for coaching lessons that will be provided in July and August 2008.
Sam has credited the account "Coaching Fees received in advance" in the Balance sheet for this amount.

How do I go about preparing the adjusting journal entries for this event as at 30 June 2008 and what do I write in the notes?

Thank you.

[pready]

The journal entry will be:
Debit Cash for 11,560
Credit Unearned Coaching Fees for 11,560.
(To record coaching Fees to be performed in July and Aug)

There is no adjusting entry required at 30 Jun.

After the lessons have been performed then the entry is:

Debit Unearned Coaching fees for 11,560
Credit Coaching Fees Earned for 11,560

[sw25]

Thanks heaps.

Just another question, is it because the entries are prepared at 30 June 2008 there is no need to apportion the months? What if they needed to be prepared for August 2008 how would this change it?

[sw25]

Anyone know? ^^

[pready]

If you provided the coaching lessons then you would Debit the Unearned Revenue Account and Credit the coaching Fees Earnded account. The amount would be based on how long the coaching fees are for Divided by the months used:

For Example if coaching fees were for $1,200 a year in advance then the entry is:

Debit Cash for 1,200
Credit Unearned Coaching Fees for 1,200

After six months of coaching the adjusting entry will be:

Debit Unearned Coaching fees for 600
Credit Coaching Fees Earned for 600
(1,200 advance x 6/12 months used in the year)