Fees earned is an account that represents the amount of revenue a company generated by providing services during an accounting period. Companies such as law firms and other service firms report fees earned on their income statement as a part of revenues. According to the accrual basis of accounting, a company must report fees earned in the accounting period in which the service was performed regardless of when it receives payment. Therefore, your company’s fees earned during an accounting period consist of services provided for immediate cash payment and services provided for which you bill a customer at a later date.
Determine the total amount of services you provided to customers during an accounting period for which you collected cash at the time of service.
Determine the total amount of services you provided to customers during the accounting period for which you agreed to collect money at a later date.
Add the amount of services you provided for cash and the amount you provided on account to calculate the total fees earned during the accounting period. For example, if you provided $10,000 in services for cash and $15,000 in services on account, add $10,000 to $15,000 to get $25,000 in fees earned during the accounting period.
Write “Fees earned” and the amount of fees earned at the top of your income statement in the revenues section to report the amount on your financial statements. For example, write “Fees earned $25,000.”
If your company uses a cash basis of accounting, your fees earned consist of only the amount of cash you received from customers during the accounting period.