. For each of the following cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2011. (Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.)

(a). One-third of the work related to $30,000 cash received in advance is performed this period

To prepare the adjusting entry for this case, we need to recognize the revenue earned from the work performed during the period. As stated, one-third of the work related to $30,000 cash received in advance is performed this period.

Here's how you can prepare the adjusting entry:

1. Identify the related asset and liability accounts:
- Prepaid Expense: This is the asset account that represents the cash received in advance for the work not yet performed.
- Unearned Revenue: This is the liability account that represents the fees collected in advance of work.

2. Determine the portion of the work performed:
Divide the cash received in advance by the total work to be done. In this case, $30,000 divided by 3 (since one-third of the work is performed) equals $10,000.

3. Adjust the Prepaid Expense account:
Debit the Prepaid Expense account by $10,000 to reduce the balance. This recognizes the portion of the work performed during the period.

4. Adjust the Unearned Revenue account:
Credit the Unearned Revenue account by $10,000 to decrease the liability. This reflects the revenue earned from the work performed during the period.

The adjusting entry can be summarized as follows:
Debit Prepaid Expense: $10,000
Credit Unearned Revenue: $10,000

By making this adjustment, we are aligning the financial statements with the actual work performed during the period, recognizing the revenue and reducing the liability accordingly.