On August 31,2016,Peter Services received $3,500 in advance of performing the service.Which journal entry is needed to record the receipt of cash?
A)Debit Unearned Revenue $3,500,and credit Cash $3,500.
B)Debit Cash $3,500,and credit Service Revenue $3,500.
C)Debit Unearned Revenue $3,500,and credit Service Revenue $3,500.
D)Debit Cash $3,500,and credit Unearned Revenue $3,500.

Question

Quizplus · Accepted Answer

The correct entry is to debit Cash for $3,500, as cash is received, and credit Unearned Revenue for $3,500, as the revenue has not yet been earned.

On August 31,2016,Peter Services Received $3,500 in Advance of Performing