Question

A business performed $8,000 of services. Their customer paid $3,000 of the amount right away but charged the remaining amount. To record this transaction, the business would:

A Debit Cash $3,000 and Debit Accounts Payable $5,000; Credit Fees Income $8,000
B Debit Accounts Receivable $8,000 and; Credit Fees Income $8,000
C Debit Cash $3,000; Credit Fees Income $3,000
D Debit Cash $3,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $8,000

Answer 1

To record this transaction, the business would Debit Cash for $3,000, Debit Accounts Receivable for $5,000, and Credit Fees Income for $8,000. Option D is the correct entry for this scenario.

Step-by-step explanation:

To record a business transaction where services worth $8,000 were provided by a business, out of which $3,000 was paid in cash and the remaining $5,000 was charged, one would need to make the following journal entries:

• Debit Cash for the amount received (i.e., $3,000)

• Debit Accounts Receivable for the amount charged but not yet paid (i.e., $5,000)

• Credit Fees Income for the total income from services rendered (i.e., $8,000)

This reflects the inflow of cash, the claim for future cash receipts (Accounts Receivable), and the earned revenue from the services provided.

The correct option to record this transaction is D. It is Debit Cash $3,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $8,000.