3.Intell licenses technologies to a manufacturer. The agreement calls for Intell to receive $3 for each unit manufactured with licensing fees remitted quarterly. As of December 31, Intell has received the following payments:

Period

Units manufactured

Licensing fees

1/1 to 3/31

475

$1,425

4/1 to 6/30

350

$1,050

7/1 to 9/30

525

$1,575

10/1 to 12/31

600

$1,800

Intell has received checks for the first two quarters, but not the third; the fourth-quarter check is not due until January.

a.If Intell is on the accrual basis, what adjusting entry should it record at year end to recognize revenue earned from this manufacturer?

b.If this entry is not recorded, how will it affect Intell's financial statements?