Answer:
The multiple choices are missing from the question as shown below:
credit to Accounts Receivable for $150,000
credit to Sales Revenue for $150,000.
credit to Unearned Sales Revenue for $150,000.
debit to Unearned Sales Revenue for $150,000.
The correct option is credit to unearned sales revenue of $150,000
Explanation:
The accrual concept of accounting used by professionals the world over,requires that revenue be recognized when the seller has discharged his obligations to the buyer,that when goods are delivered to the buyer.
However, the upfront of receipt of cash by John Deere cannot be termed sales since the obligation of delivering harvester has not been fulfilled,as a result the amount received would termed unearned sales revenue, a liability until the delivery takes place.
The appropriate entries are :
Dr Cash $150,000
Cr Unearned sales revenue $150,000
