GreenLawn Co.provides landscaping services to clients.On May 1,a customer paid GreenLawn $60,000 for 6-months services in advance.GreenLawn's general journal entry to record this transaction will include a:

Question

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Since the customer paid in advance, GreenLawn has an obligation to provide services over the next 6 months. Therefore, the $60,000 is initially recorded as a liability in the Unearned Revenue account. The credit to Unearned Revenue reflects the increase in this liability.