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 Management Fees Earned for $60,000.
B) Credit to Management Fees Earned for $60,000.
C) Credit to Unearned Management Fees for $60,000.
D) Credit to Cash for $60,000.
E) Debit to Unearned Management Fees for $60,000.

Question

Quizplus · Accepted Answer

The correct entry is to credit Unearned Management Fees for $60,000 because the payment is received in advance and the revenue has not yet been earned.