Merry Maidens Cleaning generally charges $300 for a detailed cleaning of a normal-size home. However, to generate additional business, Merry Maidens is offering a new-customer discount of 10%. On May 1, Ms. E. Pearson has Merry Maidens clean her house and pays cash equal to the discounted price. Record the revenue earned by Merry Maidens Cleaning on May 1.

Record:

Account name Debit Credit

Ca 270

Service revenues 270

Explanation:

The revenue earned by Merry Maidens Cleaning on May 1, is the amount paid by Ms. E. Pearson.

Ms. Pearson paid the discounted price, which is calculated in this way:

Regular price: $300.00 10% discount: $300.00 * 10% = $300 * 0.10 = $30.00

Payment: Regular price - discount

$300.00 - $30.00 = $270.00

When the company earns a revenue the revenues account increases and must show a credit.

If cash is received then an asset is increasing, thus the cash account must show a debit.

Thus the operation must be recorded as:

Account name Debit Credit

Car 270

Service revenues 270