Early in the accounting period, Appreciative Client paid $3,000 for services in advance of receiving them; Cash was debited and Unearned Service Fees was credited for $3,000. At the end of the accounting period, two-thirds of the services paid for had yet to be performed.
1. The proper adjusting entry is: Select one:
a. Unearned Service Fees 1,000 Service Fees Earned 1,000
b. Service Fees Earned 2,000 Unearned Service Fees 2,000
c. Unearned Service Fees 2,000 Service Fees Earned 2,000
d. Service Fees Earned 1,000 Unearned Service Fees 1,000

c. Unearned Service Fees 2,000 Service Fees Earned 2,000

Explanation:

We will calculate the amount of revenue earned as:

3,000 total contract x 2 months past / 3 month total duration = 2,000

Then, we will debit the unearned reveue to left room for service or sales revenue. Last, we will post for the sales revenue

c. Unearned Service Fees   Debit               $ 2,000

   Service Fees earned        Credit                                  $ 2,000

Explanation:

Since two thirds of the services were performed during the accounting period, the required accounting adjustment is for $ 2,000.

The unearned service fees now performed for two thirds of the value shall ve den ited thus reducing the liability and service fees earned shall be credited

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explanation:

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