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26 April, 04:30

Russell's Consulting Services Company provided $1,000 of services to the local college and immediately collected $700, but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by:

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  1. 26 April, 07:28
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    Since the college wants to pay $300 later (1000 - 700), Russell's Consulting Services Company will classify this amount as a receivable.

    The journal entry required for this transaction is:

    Cash A/C Dr 700

    Accounts Receivable A/c Dr 300

    To Sale of services 1000

    There are three accounts involved - cash, accounts receivable and sales.

    Of these, cash and accounts receivables are a part of the balance sheet and these accounts will show an increase of $700 and $300 respectively.

    Sales (or Revenues), on the other hand, forms a part of the income statement and will show an increase of $1000.
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