EX 3-10 Adjusting entry for accrued fees

At the end of the current year, $12,300 of fees have been earned but have not been
billed to clients.
a. Journalize the adjusting entry to record the accrued fees.
b. If the cash basis rather than the accrual basis had been used, would an adjusting entry
have been necessary? Explain.

a. Accounts Receivable .................................................... 12,300
                       Fees Earned.............................................................. 12,300
                                  Accrued fees.

b. No. If the cash basis of accounting is used, revenues are recognized only
when the cash is received. Therefore, earned but unbilled revenues would not
be recognized in the accounts, and no adjusting entry would be necessary.