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A company receives $6,400 cash in advance from customers for services to be provided next year....

A company receives $6,400 cash in advance from customers for services to be provided next year. Record the transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) do not includeunearned revenue in your answer

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Answer #1

When cash is received in advance before the services are rendered, the company should record the journal entry as;

Debit CASH with $6400

Credit CASH ADVANCES with $6400

The cash should be debited as the company is receiving the cash during the current year. The cash reflects in the balance sheet as an Asset.

The cash advances should be credited as the revenue of next year is being earned by the company in thhe current year. Hence such advances are recorded as liability in balance sheet.

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