Example of unearned service fees, Accounting Basics

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Q. Example of Unearned service fees?

Unearned service fees On December 7 Micro Train Company received USD 4500 from a customer in payment for future training services. The firm enters the following journal entry

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The two T-accounts recitation to training fees are Unearned Service Fees a liability and Service Revenue. These accounts shows as follows on 2010 December 31 before adjustment

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The balance in the Unearned Service Fees liability account set up when Micro Train received the cash will be converted into revenue as the company performs the training services. Previous to Micro Train prepares its financial statements it must make an adjusting entry to transfer the amount of the services performed by the company from a liability account to a revenue account.


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