Question

On June 30, a company provides $900 of services to customers on account. It usually takes the company one week to mail bills to customers and another week for customers to pay. In June, the adjusting entry is recorded as_________.a. Debit Accounts Receivable $900, Credit Deferred Revenue $900b. Debit Accounts Receivable $900, Credit Service Revenue $900c. Debit Cash $900, Credit Deferred Revenue $900d. Debit Cash $900, Credit Service Revenue $900

Answer 1

Answer:

b. Debit Accounts Receivable $900, Credit Service Revenue $900

Explanation:

In this scenario, services was performed; invoice was issued. Thus revenue must be recorded in June, though customer has not paid yet

a. Debit Accounts Receivable $900, Credit Deferred Revenue $900

False, because Deferred Revenue is about the revenues received in advance for services which have not yet been performed or goods which have not yet been delivered.

b. Debit Accounts Receivable $900, Credit Service Revenue $900

True, because revenue was recorded but customer has not paid yet.

c. Debit Cash $900, Credit Deferred Revenue $900

False, because customer has not paid yet

d. Debit Cash $900, Credit Service Revenue $900

False, because customer has not paid yet