Page 80 - Accounting Principles (A Business Perspective)

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An asset, cash, increases (debited); and a liability, unearned service revenue, increases (credited) by USD 4,500.
The credit is to Unearned Service Fees rather than Service Revenue because the USD 4,500 applies to more than
just the current accounting period. Unearned Service Fees is a liability because, if the services are never performed,

the USD 4,500 will have to be refunded. If the payment had been for services to be provided in December, the
credit would have been to Service Revenue.
Transaction 7: Dec. 15 Performed training services for a customer for cash, $5,000.
General Journal

Date Account Titles and Explanation Post. Debit Credit
Ref.
2010 Dec. 15 Cash (+A) 100 5 0 0 0
Service Revenue (+SE) 400 5 0 0 0

To record the receipt of cash for performing training

services for a customer.

General Ledger
Cash
(Dr.) Acct. No. 100 (Cr)
2010 2010
Dec. 1 Beg Bal. 50,000 Dec. 1 40,000
Dec. 7 4,500 Dec. 1 2,400
Dec. 15 5,000 Dec. 1 1,200
Service Revenue
(Dr.) Acct. No. 400 (Cr.)
2010
Dec. 15 5,000

Effects of transaction
An asset, cash, increases (debited); and a revenue, service revenue, increases (credited) by USD 5,000.
Transaction 8: Dec. 17 Paid the $1,400 account payable resulting from the transaction of December 4.
General Journal
Date Account Titles and Explanation Post. Debit Credit
Ref.
2010 Dec. 17 Accounts Payable (-L) 200 1 4 0 0
Cash (-A) 100 1 4 0 0
Paid the account payable arising from the purchase of
Supplies on December 4.

General Ledger
Accounts Payable

(Dr.) Acct. No. 200 (Cr)
2010 2010
Dec. 17 1,400 Dec. 4 1,400
Cash
(Dr.) Acct. No. 100 (Cr.)
2010 2010
Dec. 1 Beg Bal. 50,000 Dec. 1 40,000
Dec. 7 4,500 Dec. 1 2,400
Dec. 15 5,000 Dec. 1 1,200
Dec 17 1,400
Effects of transaction

Accounting Principles: A Business Perspective 81 A Global Text