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13 October, 14:47

Major Programming receives $5,000 cash in advance of providing programming services to a customer. Describe how to record the transaction to the T-accounts by completing the following sentence. Cash would be

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  1. 13 October, 16:59
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    Cash would be debited $5,000 on the left side of the T account. Unearned programming service revenue will be credited $5,000 on the right side of T account.

    Explanation:

    When cash is received, cash increases and is debited by $5,000 (note Cash is an asset account, when asset and expense accounts increase they are debited. When revenue, liability, and owner's equity increase they are credited).

    The revenue for this service is not earned yet so we pass the other leg of the entry to Unearned Programming Revenue. It is a revenue account so when it increases we credit. So we credit $5,000 to this account.
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