On Mar 3, Lyons Company received $100 cash in advance of providing catering services to a customer. Use your knowledge of what a correct journal entry should look like to identify what would be included in the correct journal entry?

cash (asset) 100 debit

unearned revenue (liability) 100 credit

Explanation:

The journal entry will erflec the cash collection fo 100

on the credit side, It will not use a revenue account.

It will be a liability account. Because the company now has the obligation to perform catering services for 100

It will recognize the careting service revenue only when those services are perform. Until that date, the payment in advance represent an obligation for the company.

So it will use unearned revenue account on the credit side.