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18 July, 09:19

Silvia's Studio provided $200 of dance instruction and rented out its dance studio to the same client for another $125. The client paid cash immediately. Identify the general journal entry below that Silvia's Studio will make to record the transaction.

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  1. 18 July, 09:28
    0
    Debit Cash account $325

    Credit Service revenue $200

    Credit rental revenue $125

    Being entries to recognize revenue earned from the provision of dance instructions and rent of studio.

    Explanation:

    The dance instruction provided is a stream of revenue while the studio rented out is another stream.

    When a service is rendered or goods are delivered and the revenue recognition criteria are met, the entries required are

    Debit Cash/Accounts receivable

    Credit Revenue

    Total amount of cash received = $200 + $125

    = $325
  2. 18 July, 09:38
    0
    The general journal entry to be made is:

    Dr Cash ($200+$125) $325

    Cr Revenue from services provided $200

    Cr Revenue from rental services $125

    Explanation:

    The sales revenue is made up of dance and rental services which implies that the account for each is credited with $200 and $125 respectively as increase in income naturally is credited to revenue.

    On other hand the receipt of cash of $200 as well as $125 which sums up to $325 implies that cash has increased by the same amount, since cash is an asset an increase in asset has a debit entry, that justifies the reason for debiting cash account with $325
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