On May 1, a business provided legal services to a client and billed the client $3700. The client promised to pay the business in one month. Which journal entry should the business record on May 1?
A)Debit Cash for $3700 and credit Service Revenue for $3700.
B)Debit Cash for $3700 and credit Retained Earnings for $3700.
C)Debit Accounts Receivable for $3700 and credit Service Revenue for $3700.
D)Debit Accounts Payable for $3700 and credit Service Revenue for $3700.

Question

Quizplus · Accepted Answer

The business should record a debit to Accounts Receivable because the client has not yet paid, and a credit to Service Revenue to recognize the revenue earned from providing the service.

On May 1, a Business Provided Legal Services to a Client