On May 1,a business rendered legal services to a client and billed the client $2,200.The client promised to pay the business in one week.What journal entry does the business record on May 1?
A)Debit Cash for $2,200 and credit Service Revenue for $2,200.
B)Debit Cash for $2,200 and credit Retained Earnings for $2,200.
C)Debit Accounts Receivable for $2,200 and credit Service Revenue for $2,200.
D)Debit Accounts Payable for $2,200 and credit Cash for $2,200.

Question

Quizplus · Accepted Answer

Since the client promised to pay in one week, the business should record this transaction as a credit sale by debiting Accounts Receivable and crediting Service Revenue, since the legal services were provided. Option A is incorrect because the business has not received cash yet, so it cannot debit Cash. Option B is incorrect because Retained Earnings are not affected by this transaction. Option D is incorrect because the business is not paying anyone.

On May 1,a Business Rendered Legal Services to a Client