Question

As of December 31, customers owe us $15,000 for landscaping services we completed in December, but they won't pay until January 3. At January 3 we received $15,000. Give the journal entry to account for the cash collection.

Answer 1

On January 3, the journal entry for receiving $15,000 in cash from customers is a debit to Cash and a credit to Accounts Receivable.

Step-by-step explanation:

The student has asked about the correct journal entry to account for the cash collection of $15,000 for landscaping services completed in December, but paid by the customers on January 3. The journal entry made on January 3, when the cash is received, will be:

• Debit Cash $15,000 (to record the cash received)
• Credit Accounts Receivable $15,000 (to reduce the outstanding amount owed by customers)

This entry reflects the cash inflow and the clearing of the owed amount that was probably recorded as an account receivable at the end of December.