Question

19. During March, Perpetual Envy Inc. provides $46,000 in consulting services for a customer. The customer paid $24,000; the other $22,000 was on account. Which of the following statements about these transactions is correct? Cash increases by $24,000, Consulting Revenue increases by $22,000, and Accounts Receivable increases by $46,000. Cash increases by $24,000, Accounts Receivable increases by $22,000, and Consulting Revenue increases by $46,000. Accounts Receivable increases by $22,000, Liabilities decrease by $24,000, and Stockholders' Equity increases by $2,000. Revenues increase by $24,000, liabilities decrease by $24,000, and Stockholders' Equity is unchanged.

Answer 1

Answer:

Cash increases by $24,000, Accounts Receivable increases by $22,000, and Consulting Revenue increases by $46,000.

Explanation:

The journal entry is shown below:

Cash         $24,000  

Accounts receivable $22,000

      To Consulting Revenue $46,000

(Being the consulting service provided is recorded)

here the cash and account receivable is increased also at the same time the consulting revenue is also increased as the assets have normal debit balance while the revenue has the normal debit balance