Question

Smart Services performed $6,000 of services. Their customer paid $1,000 of the amount right away but charged the remaining amount. To record this transaction, the business would: A. Debit Cash $1,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $6,000 B. Debit Cash $1,000; Credit Fees Income $1,000 C. Debit Accounts Receivable $6,000 and; Credit Fees Income $6,000 E. Debit Cash $1,000 and Debit Accounts Payable $5,000; Credit Fees Income $6,000

Answer 1

Answer:

A. Debit Cash $1,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $6,000

Explanation:

When revenue is earned and cash is paid, debit cash and credit revenue. However, when revenue is earned and cash is yet to be paid, debit accounts receivable and credit revenue.

Hence, given that Smart Services performed $6,000 of services. Their customer paid $1,000 of the amount right away but charged the remaining amount.

Entries required are

Debit Cash $1,000

Debit Accounts Receivable $5,000

Credit Fees Income $6,000