A law firm collected $1,800 on account for work performed in the previous month.Which of the following general journal entries will the firm make to record this transaction?
A)Debit Accounts Receivable,$1,800; credit Unearned Legal Fees Revenue,$1,800.
B)Debit Cash,$1,800; credit Unearned Legal Fees Revenue,$1,800.
C)Debit Legal Fees Revenue,$1,800; credit Accounts Receivable,$1,800.
D)Debit Accounts Receivable,$1,800; credit Legal Fees Revenue,$1,800.
E)Debit Cash,$1,800; credit Accounts Receivable,$1,800.

Question

Quizplus · Accepted Answer

When a law firm collects cash on account for work already performed, it increases its Cash account (an asset) and decreases its Accounts Receivable (also an asset). This is because the firm is receiving payment for a service it has already recorded as revenue, thus the correct entry is to debit Cash (to increase it) and credit Accounts Receivable (to decrease it).

A Law Firm Collected $1,800 on Account for Work Performed