Question

GreenLawn Co. provides landscaping services to clients. On May 1, a customer paid GreenLawn $72,000 for 6-months services in advance. GreenLawn’s general journal entry to record this transaction will include a:

Answer 1

Given that,

Amount paid = $72,000

Time period = 6-months

As cash is received it is debited and unearned revenue is credited as it is treated as liability until service is provided.

Therefore, the journal entry for this transaction is as follows:

Cash A/c Dr. $72,000

To unearned revenue A/c $72,000

(To record the unearned revenue)