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

Question

Quizplus · Accepted Answer

When a law firm bills a client for services rendered, it recognizes revenue for the services rendered. Therefore, the journal entry should include a debit to accounts receivable (increase in asset) and a credit to legal fees revenue (increase in revenue). Option A is incorrect because there is no cash received yet. Option B is also incorrect because unearned revenue is recorded when cash is received before services are performed. Option D is incorrect because cash has not been received yet. Option E is incorrect because the accounts should be debited and credited based on the type of account (revenue vs asset), not reversed.

A Law Firm Billed a Client $1,800 for Work Performed