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24 July, 16:16

Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months services in advance. Management Services' general journal entry to record this transaction will include aSelect one:a. Debit to Unearned Management Fees for $60,000. b. Credit to Management Fees Earned for $60,000. c. Credit to Cash for $60,000. d. Credit to Unearned Management Fees for $60,000. e. Debit to Management Fees Earned for $60,000.

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  1. 24 July, 16:43
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    d. Credit to Unearned Management Fees for $60,000.

    Explanation:

    In the given question, it is mentioned that the management services provide service to clients, and one client gives the advance amount of $60,000 to the management service.

    So, in case of advanced received by the customer, the journal entry would be

    Cash A/c Dr $60,000

    To Unearned Management Fees $60,000

    (Being amount received in advance)

    The asset account should be debited and the liabilities account should be credited.
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