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Brookings Brothers supplies management consulting services and bills large firms $100,000 prior to a consulting engagement for
services that will be performed. Which of the entries below would most accurately reflect the posting required?
O Credit Cash $100,000 and credit Unearned Service Revenue $100,000.
O Debit Cash $100,000 and credit Unearned Service Revenue $100,000.
O Credit Cash $100,000 and debit Unearned Service Revenue $100,000.
O Debit Cash $100,000 and debit Unearned Service Revenue $100,000.

Sagot :

Answer:debit cash $100,000 and credit unearned service revenue $100,000

Explanation:

Receiving cash in advance of services will increase the cash account (debit) and the unearned service revenue account (credit). A liability is recorded because services are owed.

The entry that accurately reflect the posting required is "Debit cash $100,000 and credit unearned service revenue by $100,000".

  • It should be noted that when a business receiving cash in advance, thus will lead to an increase in the cash account.

  • In such case, the unearned service revenue account will be credited while cash will be debited.

In conclusion, the correct option is C.

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