Question

Clean123 Inc. performs 1,000 of cleaning services for a customer. After 30 days the computer pays 50% of the invoice with a check. How will this transaction be recorded

Answer 1

The transaction of services provided by Clean123 Inc. for $1,000 would initially be recorded as a debit to accounts receivable and a credit to service revenue. Once a 50% payment is made, the transaction would be recorded as a debit to cash and a credit to accounts receivable, both for the amount of $500.

Step-by-step explanation:

The transaction for Clean123 Inc. providing $1,000 of cleaning services and receiving a 50% payment after 30 days would be recorded in two parts. Initially, when the service is provided, the accounting entry would be a debit to accounts receivable and a credit to service revenue for $1,000. Then, when the payment of 50% is made, the accounting entry would consist of a debit to cash and a credit to accounts receivable for $500.

To elaborate, the first entry upon service delivery would be:
Debit: Accounts Receivable $1,000
Credit: Service Revenue $1,000

Then, upon receiving the payment, the second entry would be:
Debit: Cash $500
Credit: Accounts Receivable $500