Question

Rubin Enterprises had the following sales-related transactions on a recent day:

a. Billed customer $27,500 on account for services already provided.
b. Collected $5,875 in cash for services to be provided in the future.
c. The customer complained about aspects of the services provided in Transaction a. To maintain a good relationship with this customer, Rubin granted an allowance of $1,500 off the list price. The customer had not yet paid for the services.
d. Rubin provided the services for the customer in Transaction b. Additionally, Rubin granted an allowance of $350 because the services were provided after the promised date. Because the customer had already paid, Rubin paid the $350 allowance in cash.

Required:
Prepare the necessary journal entry (or entries) for each of these transactions.

Answer 1

Transaction a

Debit : Account Receivable $27,500

Credit : Sales Revenue $27,500

Transaction b

Debit : Cash $5,875

Credit : Deferred Revenue $5,875

Transaction c

Debit : Sales Revenue $1,500

Credit : Account Receivable $1,500

Transaction d

Debit : Deferred Revenue $5,875

Credit : Sales Revenue $5,525

Credit : Discount received $350

Step-by-step explanation:

The journals have been prepared above.