When A Company Or Corporation Performs A Service But Has Not Yet Received Payment Then What?

When A Company Or Corporation Performed / Rendered A Service But Has Not Yet Received Payment Against Service / Corporation (Corp.) Earned Income On Account / Credit

When a company / corporation performs a service but has not yet received payment, then it debits Accounts Receivable and credits Service Revenue as it earned the revenue by rendering services to the client but still the payment has not yet received from the client.

For example, a company renders services to its client for Rs. 5000 but the payment has not yet received from client during the period. What is the adjusting entry to record for the period.

Provided / Performed / Rendered Service On Account Adjusting Entry / Rendered Service On Credit Adjusting Entry

The adjusting entry to record is shown below:

                                                                        Accounts Receivable a/c  5000

 

                                                                                                                     Service Revenue a/c  5000

 

                                                        (Service Revenue Earned But The Payment Has Not Yet Received)

Accounts receivable is a Current Asset and recorded on balance sheet while service revenue is a direct revenue as well as a temporary account and hence recorded in Income Statement for the accounting period.