A company provided $12,000 of consulting services on account.The customer promises payment in 30 days.Identify the journal entry below that properly records this transaction.
A) $$\begin{array} { | l | r | l | }
\hline \text { Accounts receivable } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$$
B) $$\begin{array} { | l | r | l | }
\hline \text { Cash } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$$
C) $$\begin{array} { | l | r | l | }
\hline \text { Consulting services revenue } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | r | l | }
\hline \text { Accounts payable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$$
E) $$\begin{array} { | l | r | l | }
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$$

Question

A company provided $12,000 of consulting services on account.The customer promises payment in 30 days.Identify the journal entry below that properly records this transaction.
A) $$\begin{array} { | l | r | l | } 
\hline \text { Accounts receivable } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$$
B) $$\begin{array} { | l | r | l | } 
\hline \text { Cash } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$$
C) $$\begin{array} { | l | r | l | } 
\hline \text { Consulting services revenue } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$$
D) $$\begin{array} { | l | r | l | } 
\hline \text { Accounts payable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$$
E) $$\begin{array} { | l | r | l | } 
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The correct journal entry for providing services on account (meaning the payment will be received later) is to debit Accounts Receivable (increasing assets) and credit Consulting Services Revenue (increasing equity). This reflects that the company has earned revenue and expects to receive cash in the future.

A Company Provided $12,000 of Consulting Services on Account Accounts receivable 12,000 Cash 12,000\begin{array} { | l | r | l | } \hline \text { Accounts receivable } & 12,000 & \\\hline \text { Cash } & & 12,000 \\\hline\end{array} Accounts receivable Cash ​12,000​12,000​​

A Company Provided $12,000 of Consulting Services on Account $\begin{array} { | l | r | l | } \hline \text { Accounts receivable } & 12,000 & \\\hline \text { Cash } & & 12,000 \\\hline\end{array}$