Consulting Revenue Received In Advance Journal Entry

When the company received consulting fees in advance from its client, then it is a Current Liability for the company’s business as still the services are not rendered to the client, so it is not earned for the accounting period and also the payment received by the company in advance. Unearned Consulting Fees / Revenue is shown on the Balance Sheet.

In the case of consulting fees received in advance in cash / bank, the following entry is recorded as shown below:

                                        Cash a/c / Bank a/c   XXX

                                                                       Unearned Consulting Revenue a/c   XXX

                                               (Consulting Fees Revenue Received In Advance)

In the above adjusting entry, If the company received consulting fees on account, then we debit Accounts Receivable Account and credit consulting revenues received in advance.

At the end of the accounting period, when the company actually rendered the services to the client, then the above adjusting entry is reversed as shown below:

                        Unearned Consulting Revenue a/c   XXX

                                                                               Cash a/c / Bank a/c   XXX

            (Adjusting Entry Related To Unearned Consulting Revenue, Now, Reversed)

Now, we record the normal entry for consulting fee received as shown below:

                                          Cash a/c / Bank a/c  XXX

                                                                        Consulting Fees Received a/c  XXX

                                                                

                                                      (Consulting Fees Revenue Earned)