Question

On May 9, the company collected $1000 cash as partial payment for consulting services that were completed on May 1. Identify the general journal entry that the company will make to record the May 9 transaction.

Answer 1

The general journal entry for the May 9 transaction would be:

Cash 1,000

Accounts Receivable 1,000

Step-by-step explanation:

When the company collected $1,000 cash as partial payment for consulting services completed on May 1, it recognizes the cash inflow and adjusts the accounts receivable. The debit to Cash increases the cash asset account, reflecting the amount received, and the credit to Accounts Receivable reduces the amount owed by the customer.

This journal entry ensures that the company accurately records the cash received and updates its accounts receivable to reflect the reduced outstanding balance from the customer's partial payment. It aligns with the revenue recognition principle, acknowledging the cash inflow when earned.

Efficient and accurate recording of transactions in the general journal is fundamental for maintaining reliable and transparent financial records.