A law firm collected $3,600 for work to be performed in the following month. Whi

Question

A law firm collected $3,600 for work to be performed in the following month. Which of the following general journal entries will the firm make to record this transaction? Multiple Choice

Debit Accounts Receivable, $3,600; credit Unearned Legal Fees Revenue, $3,600.

Debit Cash, $3,600; credit Unearned Legal Fees Revenue, $3,600.

Debit Legal Fees Revenue, $3,600; credit Accounts Receivable, $3,600.

Debit Accounts Receivable, $3,600; credit Legal Fees Revenue, $3,600.

Debit Cash, $3,600; credit Accounts Receivable, $3,600.

Explanation / Answer

Correct Answer is: Debit Cash, $3,600; credit Unearned Legal Fees Revenue, $3,600.

Account Receivable will not be debited beacuse nothing is due to us from the party. Further, since the work is yet to be performed revenue account can not be credited.

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