Silvia's Studio provided $200 of dance instruction and rented out its dance studio to the same client for another $125. The client paid cash immediately. Identify the general journal entry below that Silvia's Studio will make to record the transaction.

Debit Cash account $325

Credit Service revenue $200

Credit rental revenue $125

Being entries to recognize revenue earned from the provision of dance instructions and rent of studio.

Explanation:

The dance instruction provided is a stream of revenue while the studio rented out is another stream.

When a service is rendered or goods are delivered and the revenue recognition criteria are met, the entries required are

Debit Cash/Accounts receivable

Credit Revenue

Total amount of cash received = $200 + $125

= $325

The general journal entry to be made is:

Dr Cash ($200+$125) $325

Cr Revenue from services provided $200

Cr Revenue from rental services $125

Explanation:

The sales revenue is made up of dance and rental services which implies that the account for each is credited with $200 and $125 respectively as increase in income naturally is credited to revenue.

On other hand the receipt of cash of $200 as well as $125 which sums up to $325 implies that cash has increased by the same amount, since cash is an asset an increase in asset has a debit entry, that justifies the reason for debiting cash account with $325