Early in the accounting period, a customer paid $1,500 for services in advance of receiving them; Cash was debited and Unearned Service Fees was credited for $1,500. At the end of the accounting period, two-thirds of the services paid for had yet to be performed.
The proper adjusting entry is:
A) Unearned Service Fees 1,000
Service Fees Earned 1,000
B) Service Fees Earned 500
Unearned Service Fees 500
C) Unearned Service Fees 500
Service Fees Earned 500
D) Service Fees Earned 1,000
Unearned Service Fees 1,000
E) None of the above

Question

Quizplus · Accepted Answer

Since one-third of the services have been performed, $500 should be recognized as earned revenue, reducing the Unearned Service Fees by $500.

Early in the Accounting Period, a Customer Paid $1,500 for Services