Final answer:
The correct journal entry is to debit cash for $2,000 and credit unearned legal fees revenue for $2,000, which reflects the receipt of cash and the obligation to provide a service in the future.
Step-by-step explanation:
The law firm collected $2,000 in advance for work to be performed in three months. Since the service has not yet been performed, the revenue cannot be recognized at this time, according to the accrual basis accounting principles. Therefore, the correct journal entry to record this transaction would be to recognize the cash receipt and represent this revenue as a liability (as it is not yet earned). The correct entry from the given options is:
e) Debit cash, $2000; credit unearned legal fees revenue, $2000.
This records an increase in cash (asset) and an increase in unearned revenue (liability).