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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Unearned Sales Revenue

Brand Landscaping offers a promotion where a customer’s lawn will be mowed 20 times if the customer pays $700 in advance.

Required:

Prepare the journal entry to record (1) the customers' prepayment of S700 and (2) Brand’s mowing of the lawn one time.

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

To prepare:

The journal entries to record the customer’s prepayment and mowing the lawn one time.

Explanation

The journal entries to record the customer’s prepayment and mowing the lawn one time are explained as follows:

Journal Entries
Account Titles Debit Credit
Cash $ 700

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