A law firm collected $1,800 on account for work performed in the previous month.Which of the following general journal entries will the firm make to record this collection of cash?
A)Debit Accounts Receivable,$1,800; credit Unearned Legal Fees Revenue,$1,800.
B)Debit Cash,$1,800; credit Unearned Legal Fees Revenue,$1,800.
C)Debit Legal Fees Revenue,$1,800; credit Accounts Receivable,$1,800.
D)Debit Accounts Receivable,$1,800; credit Legal Fees Revenue,$1,800.
E)Debit Cash,$1,800; credit Accounts Receivable,$1,800.

Question

Quizplus · Accepted Answer

When a law firm collects cash on account for work previously performed, it means the firm is receiving payment for services already rendered and invoiced. Therefore, the correct journal entry increases (debits) Cash, as the firm is receiving money, and decreases (credits) Accounts Receivable, as the outstanding amount owed by the client is being paid off. This is accurately reflected in option E.

A Law Firm Collected $1,800 on Account for Work Performed