Merriweather Post Pavillion received a $820 check from a customer for the balance due. The transaction was erroneously recorded

Question

4 years ago

11

Merriweather Post Pavillion received a $820 check from a customer for the balance due. The transaction was erroneously recorded

as a debit to Cash $280 and a credit to Service Revenue $280. The correcting entry is:________.
a. Cash 820
Accounts Receivable 820
b. Cash 540
Accounts Receivable 280
Service Revenue 820
c. Cash 540
Service Revenue 280
Accounts Receivable 820
d. Accounts Receivable 820
Cash 540
Service Revenue 280

Business

1 answer:

steposvetlana [31] · Answer 1 · 2021-12-05T00:52:03+03:00

The correcting entry is:

C. Debit Cash $540

Service Revenue $280

Credit Accounts Receivable $820

<u>Explanation</u>:

Service revenue is report generated regarding the sales provided to its customers by a business. Generally the revenue will be billed. The revenue can be recognized even it is not billed.

Service Revenues are always mentioned in the income statement maintained by the company. Balance due is the amount owe by the customer. Revenues are considered as the subdivision of retained earnings. Usually some of the business events were not recorded, so the entries adjustment is made often.