Question

On March 1, a designer received a check for $7,500 from a customer for services to be provided after the customer chose a color scheme for the first floor of her house. On July 31, the designer completed the design work for this customer. Prepare the July 31 journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer:

unearned service revenue 7,500 DEBIT

       service revenue 7,500 CREDIT

Explanation:

the job is complete on July 31th

so we write-off the unearned service reveue

and we recognize the service revenue for the whole amount of the contract

The cash receipt occurs on March 1st so w edon't haveto post anythign related to cash on July 31th.

the unearned revenue account is used first because the business has the obligation of perform the job or return the cash. So it is a liablity until the job is completed