A roofing company collects fees when jobs are complete.The work for one customer,whose job was bid at $3,000,has been completed as of December 31,but the customer has not yet been billed.Assuming adjustments are only made at year-end,what is the adjusting entry the company would need to make on December 31,the calendar year-end?

A) Debit Cash,$3,000; credit Roofing Fees Revenue,$3,000.
B) Debit Roofing Fees Revenue,$3,000; credit Accounts Receivable,$3,000.
C) Debit Accounts Receivable,$3,000; credit Roofing Fees Revenue,$3,000.
D) Debit Cash,$3,000; credit Accounts Receivable,$3,000.
E) No adjustment is required.

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lynette tucci · Accepted Answer

Final Answer : C, Explanation :  The company has completed the job for the customer, but has not yet billed them, indicating that the revenue has not yet been recorded. Therefore, an adjusting entry is required to recognize the revenue earned. The adjusting entry would involve debiting Accounts Receivable for $3,000 (to record the amount owed by the customer) and crediting Roofing Fees Revenue for $3,000 (to record the revenue earned). Option C is the only answer choice in line with this explanation.

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