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8 January, 11:42

Golddigger services inc. provides services to clients. on may 1, a client prepaid golddigger services $65,000 for 6-months services in advance. golddigger services' general journal entry to record this transaction will include a:

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  1. 8 January, 14:22
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    If these are the missing choices:

    a. Debit to Unearned Revenue for $65,000.

    b. Credit to Management Fee Revenue for $65,000.

    c. Credit to Cash for $65,000.

    d. Credit to Unearned Revenue for $65,000.

    e. Debit to Management Fees Revenue for $65,000.

    My answer is: D. Credit to Unearned Revenue for $65,000.

    May 1 journal entry will also have a debit of Cash for $65,000.

    Since it is a prepayment, it means that Golddigger Services Inc. has a liability to perform the services that have been prepaid.

    May 31 journal entry will have a debit to Unearned Revenue and a credit to Earned Revenue for 10,833.33. This is for the services earned for the 1st month.

    65,000 / 6 months = 10,833.33 per month.
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