Question

On February 3, Purple Co. performed services for cash of 4,000. On February 9, Purple Co. performed3,200 of services on account. The customer expects to pay the company in the following month. What is the journal entry for the February 9 transaction?

Answer 1

The journal entry for Purple Co. on February 9 for services provided on account is to debit Accounts Receivable for $3,200 and to credit Service Revenue for the same amount, reflecting an increase in receivables and revenue recognition.

Step-by-step explanation:

The transaction on February 9, where Purple Co. performed services worth $3,200 on account, can be recorded in the journal as follows Journal Entry on February 9: Debit Accounts Receivable $3,200 Credit Service Revenue $3,200

This entry records the fact that Purple Co. has provided services and has the right to receive cash in the future, increasing its Accounts Receivable. At the same time, it records the revenue earned from services provided, even though payment has not yet been received, following the accrual basis of accounting.