Question

If a company has advance ticket sales totaling $2,000,000 for the upcoming football season, the receipt of cash would be journalized as:
Group of answer choices

(A) Debit Sales, credit Unearned Revenue.
(B) Debit Unearned Revenue, credit Sales.
(C) Debit Cash, credit Unearned Revenue.
(D) Debit Unearned Revenue, credit Cash.
(E) Debit Cash, credit Revenue.

Answer 1

Answer:

(C) Debit Cash, credit Unearned Revenue.

Explanation:

The journal entry is shown below:

Cash A/c Dr $2,000,000

   To Unearned revenue A/c $2,000,000

(Being the receipt of cash is recorded)

Since the cash is received so we debited the cash account as it increases the current assets and credited the unearned revenue account as it is a current liability account so the same is to be credited