Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 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 a partial payment and a promise to pay the remainder next month. Therefore, the journal entry should include both accounts receivable and revenue accounts. Option B correctly records the transaction by debiting accounts receivable for $1,300 and cash for $1,300 and crediting consulting revenue for $2,500. Option A incorrectly debits consulting revenue for $2,500, which is not the correct amount received. Option C debits accounts receivable and consulting revenue for $2,500 each, which is incorrect since only a partial payment has been made. Option D debits accounts receivable $2,500, which is incorrect since only $1,300 was received.

Kincaid Company Provided Consulting Services of $2,500 to a Customer