Question

Rimble Graphic Design receives $2,750 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?
A) Accounts Receivable 1,850
Cash 1,850
B) Cash 1,850
Unearned Design Revenue 1,850
C) Cash 1,850
Accounts Receivable 1,850
D) Accounts Receivable 1,850
Unearned Design Revenue 1,850
E) Cash 1,850
Design Revenue 1,850

Answer 1

Answer:

C) Debit Cash $2,750

    Credit Accounts Receivable $2,750

Explanation:

When payment is received in respect of services rendered or goods sold in the past periods, the accounting rule is to debit cash or bank as the case may be and credit account receivable for the amount received. This is necessary because in period when transaction took place, revenue has been credited and account receivable debited.