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Before a $2,500 accrued-revenue adjusting entry, Accounts Receivable had a debit balance of $1,000 and Fees Earned a credit balance of $3,600. What are the two balances immediately after the entry is posted?
AAccounts Receivable $3,500; Fees Earned $6,100
BAccounts Receivable $1,000; Fees Earned $3,600
CAccounts Receivable $6,100; Fees Earned $3,500
DAccounts Receivable $2,500; Fees Earned $2,500
Answer & Solution
Correct answer: A. Accounts Receivable $3,500; Fees Earned $6,100
1. The entry adds $\$2{,}500$ to each account.
2. Accounts Receivable $= 1{,}000 + 2{,}500 = 3{,}500$.
3. Fees Earned $= 3{,}600 + 2{,}500 = 6{,}100$.
4. So A is correct; B ignores the entry, C swaps the totals, and D shows only the adjustment.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §2.5.2 "Fees Earned—Accrued Revenue", p.86_