On Mar 3, L. Lyons Company Received $100 Cash In Advance Of Providing Catering Services To A Customer. Use Your Knowledge Of What A Correct Journal Entry Should Look Like To Identify What Would Be Included In The Correct Journal Entry. (Check all that apply.)
The effect of this Business Transaction on Accounting Equation is that, assets side / left side is increased by $100 due to increase in cash and liabilities & equity side / right side is also increased by $100 due to increase in unearned revenue, so the accounting equation remains in balance as shown below:
Assets = Liabilities + Equity
+Cash = +Unearned Revenue
+$100 = +$100
The option A is incorrect as cash is not credited and listed second. It is
debited and listed first.
The option B is also wrong choice as in this journal entry, there is no
involvement of accounts receivable, so this account is neither debited nor
listed first in the journal entry.
The option C is also incorrect as unearned is credited and listed second and not debited and listed first.
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