I am confused about this entry. Can some one help?
Completed a five-day project for Holly’s Heating and Cooling Co. and billed it $5,500 which is the total price of $7,000 less the advance payment of $1,500 received in December.
I know i have to debit accounts receivable for 5500 and credit revenue account but do I do anything with the 1500 received in advance during the previous fiscal year?
Thanks
Accounting – Recording An Advance Received In Dec?
By pay online Posted in: payment
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Since the work had not been performed yet, when the advance was received in November, it represented unearned income (a liability). The entry would have been:
Dr Cash 1,500
Cr Unearned Revenue 1,500
Now that the work is completed, the full amount can be credited to revenue (service fees).
Dr Accounts Receivable 5,500
Dr Unearned Revenue 1,500
Cr Service Fees 7,000