Kincaid Company provided consulting services of $4,500 to a customer who paid $2,300 and promised to pay the remainder next month. Which of the following journal entries correctly records this transaction?

Question

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The transaction involves providing consulting services and receiving partial payment along with a promise to pay the remaining amount next month. Therefore, the entry should reflect the following:

Debit Accounts Receivable: $2,300 (to record the partial payment)
Debit Interest Receivable: TBD (to record the interest earned on the outstanding balance)
Credit Consulting Service Revenue: $4,500 (to record the revenue earned from consulting services)

Option A is incorrect because it only records the revenue earned without reflecting the partial payment or the promise to pay.
Option B is the correct choice because it records the partial payment, the revenue earned, and creates a new account for interest receivable (which will be recorded next month based on the promise to pay).
Option C is incorrect because it only records the revenue earned without reflecting the partial payment or the promise to pay.
Option D is incorrect because it only records the partial payment without reflecting the revenue earned or the promise to pay.

Kincaid Company Provided Consulting Services of $4,500 to a Customer