Bryson, Inc. collects cash from customers two ways: a. Accrued revenue. Some cus

Question

Bryson, Inc. collects cash from customers two ways:
a. Accrued revenue. Some customers pay Bryson after Bryson has performed service for the customer. During 2010, Bryson made sales of $60,000 on account and later received cash of $45,000 on account from these customers.

b. Unearned revenue. A few customers pay Bryson in advance, and Bryson later performs the service for the customer. During 2010 Bryson collected $7,500 cash in advance and later earned $3,500 of this amount.

Journalize for Bryson

a. Earning service revenue of $60,000 on account and then collecting $45,000 on account.
b. Receiving $7,500 in advance and then earning $3,500 as service revenue.

Explanation / Answer

a.
Accounts Receivable 60,000
--Revenue 60,000

Cash 45,000
--Accounts Receivable 45,000

b.
Cash 7,500
--Unearned Revenue 7,500

Unearned Revenue 3,500
--Revenue 3,500

AR and cash are assets with debit normal balances.
Revenue later becomes zeroed into retained earnings (equity) and has a credit normal balance.
Unearned Revenue is a liability with a credit normal balance.

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