Suppose your company sells services of $370 In exchange for $205 cash and $165 o

Question

Suppose your company sells services of $370 In exchange for $205 cash and $165 on account Required: 1. Prepare the Journal entry to record this transaction (If no entry is required for a transactionlevent, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the service revenue of $205 for cash and $165 on account. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Explanation / Answer

Step 1:Journal Entry Worksheet

Step 2: The amount that should be reported as net cash flow from operating activities

Net cash Flow=$370-$165=$205

Step 3:Calculation of Net Income

Net Income=Service Income-Expenses

=$370-0=$370

Step 4:Computation of how the indirect method convert the net income to net cash flow from operating activities

Date Particulars Debit Credit Cash $205 Debtors/Party A/c $165 To Service revenue $370 (Being service income recorded)

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