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10 September, 03:00

Cash of $100 received at the time a service was provided was journalized and posted as a debit to Cash $100 and a credit to Accounts Receivable $100. Assuming the incorrect entry is NOT reversed, the correcting entry is (a) debit Service Revenue $100 and credit Accounts Receivable $100.

(b) debit Accounts Receivable $100 and credit Service Revenue $100.

(c) debit Cash $100 and credit Service Revenue $100.

(d) debit Accounts Receivable $100 and credit Cash $100.

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  1. 10 September, 05:22
    0
    The correct option will be option B.

    Dr Accounts Receivable $100

    Cr Service Revenue $100

    Explanation:

    The reason is that the service was delivered and the money was received at just after the service delivered (the same day). So there is no need to pass the entry which includes cash received against receivables because here the cash received is because we have delivered services no because of any amount receivable.

    So the entry that must be passed:

    Dr Cash $100

    Cr Service Revenue $100

    And what we have done is:

    Dr Cash $100

    Cr Accounts Receivables $100

    The correct entry would be removal of the effect of decrease in receivable which must be increased and increase in revenue which has not been recognized.

    So the entry is that will correct the books of accounts will be:

    Dr Accounts Receivables $100

    Cr Service Revenue $100
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