Golddigger Services Inc.provides services to clients.On May 1,a client prepaid Golddigger Services $60,000 for 6-months services in advance.Golddigger Services' general journal entry to record this transaction will include a:
A)Debit to Unearned Management Fees for $60,000.
B)Credit to Management Fees Earned for $60,000.
C)Credit to Cash for $60,000.
D)Credit to Unearned Management Fees for $60,000.
E)Debit to Management Fees Earned for $60,000.

Question

Quizplus · Accepted Answer

The prepayment of services represents unearned revenue for Golddigger Services. Therefore, the appropriate journal entry is to credit the liability account Unearned Management Fees for $60,000 and debit the asset account Cash for $60,000. Option D correctly reflects this entry.