Question

On May 1, Mary's Morsels provided catering services at a wedding. The bride is billed $4,000 and will pay during the following month. Record this transaction on May 1 in the accounting equation of Mary's Morsels by:________

Answer 1

Answer:

Debit Accounts receivables (B/S)   $4,000

Credit service revenue (P/L)           $4,000

Being entries to recognize revenue earned.

On the accounting equation of Mary's Morsels, it is an addition of $4,000 to assets and the addition of the same amount to the owners equity.

Explanation:

When service is provided but cash is yet to be received, such service is said to have been provided on account. The accounts involved are the service revenue account and accounts receivable.

As such where On May 1, Mary's Morsels provided catering services at a wedding. The bride is billed $4,000 and will pay during the following month, the entries required are

Debit Accounts receivables (B/S)   $4,000

Credit service revenue (P/L)           $4,000

Being entries to recognize revenue earned.

On the accounting equation of Mary's Morsels, it is an addition of $4,000 to assets and the addition of the same amount to the owners equity.