A Company Received $800 From Clients Who Were Previously Billed For Consulting Services Provided. Prepare The General Journal Entry To Record This Transaction.

A Company Received $800 From Clients Who Were Previously Billed For Consulting Services Provided / Who Had Previously Purchased Services On Account. Prepare The General Journal Entry To Record This Transaction | Short Question Answer

Initially, when the company billed for consulting services provided, the company earned the Revenue but as the amount is due from clients, so the company record the Accounts Receivable Account. So, the company debit Accounts Receivable Account and credit Consulting Service Revenue Account. In this way, adjusting entry is recorded.

But, now the clients paid the amount in cash and the company received the payment for consulting services rendered by the company to clients, so we record the following journal entry as shown below:

                                                        Cash a/c  $800

 

                                                                              Account Receivable a/c  $800

 

                                                              (Cash Collected From Clients)

The cash account of $800 is debited as it is coming into the business i.e., cash inflow, so we debit it as a current asset while accounts receivable is decreasing as the clients paid the company against the consulting rendered to him, so we credit it. Both cash account and accounts receivable will be recorded on balance sheet under current assets on asset side.