On June 20,2013,Parker Services received $2,400 in advance from a customer for one month's service.The journal entry to record the receipt of cash would be which of the following?
A) Debit Unearned service revenue $2,400 and credit Cash $2,400.
B) Debit Cash $2,400 and credit Service revenue $2,400.
C) Debit Unearned service revenue $2,400 and credit Service revenue $2,400.
D) Debit Cash $2,400 and credit Unearned service revenue $2,400.

Question

Quizplus · Accepted Answer

The receipt of cash results in an increase in the cash account, which is debited for $2,400. At the same time, the company has an obligation to provide services in the future, which is recorded as a liability in the unearned service revenue account. Therefore, unearned service revenue is credited for $2,400.

On June 20,2013,Parker Services Received $2,400 in Advance from a Customer