Question

You preform a business service for which you charge $575. You receive $200 in cash and a promissory note for the balance, payable in 60 days. What steps will you use to show this transaction on your balance sheet?

Answer 1

Cash is increased by $ 200 , and Notes Receivable is also increased by $ 375

Revenue Earned is also increased By $ 575.

Explanation:

We make a journal entry

Cash $200 Debit

Notes Receivable $ 375 Debit

Services Revenue Earned $ 575 Credit

In the balance sheet the Cash is increased by $ 200 , and Notes Receivable is also increased by $ 375 on the Assets sides.

On the Liabilities side in the Owner's Equity section Revenue Earned is also increased By $ 575.

Increasing both sides ( Assets and Liabilities sections) with equal amounts will have no effect on the Balance Sheet .