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Chapter 3: Q 27QS_b (page 145)

On December 31, 2016, Yates Co. prepared an adjusting entry for \(12,000 of earned but unrecorded consulting
fees. On January 16, 2017, Yates received \)26,700 cash in consulting fees, which included the
accrued fees earned in 2016. (Assume the company uses reversing entries.)
a. Prepare the December 31, 2016, adjusting entry.
b. Prepare the January 1, 2017, reversing entry.
c. Prepare the January 16, 2017, cash receipt entry.

Short Answer

Expert verified

Answer:

The consulting fees account is debited and accrued revenue received credited with $12,000.

Step by step solution

01

Step-by-Step Solution

Step 1: Definition of accrued revenue

When work is done but payment is not received, this amount is known as accrued revenue.

02

Reversal Entry

	Journal entry
Date	Particular	Debit	Credit
January 1, 2017	Consulting Fees	$12,000
	Accrued Revenue Received		$12,000
	(Reversal entry of accrued revenue)

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Most popular questions from this chapter

In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

A. Current assets

B. Long-term investments

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A. Current assets E. Current liabilities

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In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.

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Damita Company reported net income of \(48,025 and net sales of \)425,000 for the current year. Calculate

the company’s profit margin and interpret the result. Assume that its competitors earn an average profit

margin of 15%.

Adjusting entries affect at least one balance sheet account and at least one income statement account.

For the entries below, identify the account to be debited and the account to be credited from the following

accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated

Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense;

Depreciation Expense. Indicate which of the accounts is the income statement account and which is

the balance sheet account.

a. Entry to record revenue earned that was previously received as cash in advance.

b. Entry to record wage expenses incurred but not yet paid (nor recorded).

c. Entry to record revenue earned but not yet billed (nor recorded).

d. Entry to record expiration of prepaid insurance.

e. Entry to record annual depreciation expense.

See all solutions

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