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    Paula Gomes's Avatar
    Paula Gomes Posts: 6, Reputation: 1
    New Member
    		  
    #1

    Mar 5, 2007, 08:47 AM
    Adjusting entries
    How should I calculate and record the adjusting entry presented below in the trial balance on December 31,2005:

    On November 1, 2005 a company agreed to do a six-month course for a client, with a monthly fee of $2,200. The client paid the first five months' fees in advance.
    When the cash was received, the Unearned Extension Fees account was credited.

    Thank you

    Paula
    randyhu's Avatar
    randyhu Posts: 1, Reputation: 1
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    #2

    Mar 5, 2007, 11:32 PM
    That is correct... it is unearned until the calender date has passed.
    bhet's Avatar
    bhet Posts: 77, Reputation: 9
    Junior Member
    		  
    #3

    Mar 6, 2007, 08:18 PM
    Dr. Unearned extension fees 2200
    Cr. Earned extension fees 2200

    Adjusting entry should be made to the extent of the earned extension fee. Since only 1 month has passed only the 1 month expired should be acounted as earned
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #4

    Mar 6, 2007, 11:32 PM
    It would either be:

    Dr. Expense 4,400
    Cr. Prepaid 4,400

    Or
    Dr. Unearned Revenue 4,400
    Cr. Revenue 4,400

    2 months x 2,200 per month = 4,400

    I am unclear as to who you are needing the JE for.
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