In January,the Huntington Beach Resort (HBR)accepts your reservation and receives your $2,000 payment for a week of sun and fun in California during spring break.In January,HBR will record a journal entry that includes a debit to:
A) Cash and a credit to Unearned Revenue.
B) Accounts Payable and a credit to Service Revenue.
C) Cash and a credit to Service Revenue.
D) Service Revenue and a credit to Cash.

Question

Quizplus · Accepted Answer

HBR received payment from the customer in advance for services that will be provided later. Since the payment is not yet earned, it is recorded as unearned revenue (a liability account) on the balance sheet. Therefore, the journal entry should include a debit to Cash (an asset account) and a credit to Unearned Revenue.

In January,the Huntington Beach Resort (HBR)accepts Your Reservation and Receives