Debit Accounts Receivable $2000. Credit Service Revenue $2000.There would still be open transactions if there were no adjusting entries made to the journal.
What Is a Journal Entry for Adjusting?
A general ledger entry known as a "adjustment journal entry" is made at the conclusion of an accounting period to report any unrealized income or costs during the time. An adjusting journal entry is necessary to correctly account for a transaction that began in one accounting period and ended in another. Adjusting journal entries can also be used to describe financial reporting that fixes an error from a prior accounting period.
Why Is It Important to Correct Journal Entries?
There are occasions when one accounting period will expire with such a scenario still unresolved because many businesses operate where real delivery of items may be delivered at a separate time than payment (either beforehand in the case of credit or after in the case of pre-payment). In this situation, the discrepancies in the timing of payments and expenses are reconciled using the adjusting journal entries.
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