What is Management Fees Received In Advance

Management Fees Received In Advance or Unearned Management Fees or Prepaid Management Fees is a Current Liability for a Management Company which received it in advance but still not rendered the services at the end of the accounting period. It is shown on Liabilities & Equity side of Management Company’s Balance Sheet.

Management Fees Received In Advance Journal Entry

Following Journal Entry is passed in the Book of Management Company as shown below:

                                          Cash a/c  XXX

                                                      Management Fees Received In Advance a/c  XXX

                                      (Management Fees Received In Advance for the Month)

In the next month, when the management company actually rendered the services against which it received Management Fees, the following Adjusting Entry is recorded according to Accrual Basis of Accounting as shown below:

 Management Fees Received In Advance a/c  XXX

                                                                      Management Fees Received a/c  XXX

                                        (The Portion Of Management Fees Received Now Earned)