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The general journal for Wells Tech includes the entry below. Based on the information in this entry, which of the following can you determine about the corresponding general ledger entries?

The rent expense of $650 was debited to account 500 and the cash paid was credited to account 600.

Which of the following journal entries is appropriate when a company receives payment in advance for goods or services?
Debit cash and credit a liability account or a revenue account.

1 Answer

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Answer:

Debit cash and credit a liability account

Q:

Which of the following journal entries is appropriate when a company receives payment in advance for goods or services?

Step-by-step explanation:

The company will dbeit the cash, as it is receiving it and cash is an asset account that increase from debit.

As the company receives the amount in advance, it assumes the obligation to perform in the future. This is the concept of a liability.

To be a revenue, it is required that the services or sale is performed. As the payment is before the sale or service it is not earned.

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