To journalize the business receiving $2,200 for catering services to a wedding on June 11, but the payment is received on May 29, you would make the following entries:
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On May 29 (when cash is received):
- Debit Cash $2,200 (to record the receipt of cash)
- Credit Unearned Revenue $2,200 (to record the obligation to provide services in the future)
This entry reflects that the business has received cash but has not yet provided the catering services, so it records the cash as a liability until the services are performed.
Here’s how it would look in a journal entry format:
| Date | Account Title | Debit | Credit | |------------|------------------------|----------|----------| | May 29 | Cash | $2,200 | | | | Unearned Revenue | | $2,200 |
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On June 11 (when the service is provided):
- Debit Unearned Revenue $2,200 (to recognize the revenue now that services have been provided)
- Credit Catering Revenue $2,200 (to record the revenue earned)
This entry reflects that the service has now been provided, recognizing the revenue that was previously unearned.
Here’s how it would look in a journal entry format:
| Date | Account Title | Debit | Credit | |------------|------------------------|----------|----------| | June 11 | Unearned Revenue | $2,200 | | | | Catering Revenue | | $2,200 |
These entries ensure that the revenue is recognized in the period in which the service is performed while accurately reflecting the cash received in advance.