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Q15SE

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Horngren'S Financial And Managerial Accounting
Found in: Page 220

Short Answer

Ocean Breeze Associates accrued $8,500 of Service Revenue at December 31. Ocean Breeze Associates received $14,500 on January 15, including the accrued revenue recorded on December 31. Requirements 1. Record the adjusting entry to accrue Service Revenue. 2. Record the reversing entry. 3. Journalize the cash receipt.

Journal entries are as follows:

Requirements

Accounts and Explanation

Debit

Credit

1

Accounts Receivable

$8,500

Service Revenue

$8,500

To record the accrued service revenue

2

Service Revenue

$8,500

Accounts Receivable

$8,500

To record reversing entry

3

Cash

$14,500

Service Revenue

$14,500

To record receipt of service revenue

See the step by step solution

Step by Step Solution

Step 1: Explanation on Adjusting Entry

Adjusting entry will be recorded by debiting accounts receivable and crediting service revenue by $8,500, respectively.

Step 2: Explanation on Reversing Entry

Reversing entry will be recorded by debiting service revenue and crediting accounts receivable by $8,500, respectively.

Step 3: Explanation on Cash Receipt Entry

Cash receipt will be recorded by debiting cash and crediting service revenue by $14,500, respectively.

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