Question

A company receives $6,400 cash in advance from customers for services to be provided next year. Record the transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) do not includeunearned revenue in your answer

Answer 1

Answer:

Debit Cash account $6,500

Credit Deferred revenue  $6,500

Explanation:

When cash is collected in advance for a service yet to be rendered, the revenue for that service will be deferred in recognition.

The company will recognize an asset in form of cash and a liability in form of deferred revenue.

Hence to record the transaction,

Debit Cash account $6,500

Credit Deferred revenue  $6,500

Being entries to recognize cash collected for service yet to be rendered.