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27 October, 12:40

Duluth Co. collected a $6,000 cash advance from a customer on November 1, Year 1 for work to be performed over a six-month period beginning on that date. If the year-end adjustment is properly recorded, what will be the effect of the adjusting entry on Duluth's Year 1 financial statements?

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  1. 27 October, 12:49
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    Cash 6000

    Cash in advance 6000

    Cash in advance 2000

    Reveneu 2000

    Explanation:

    A cash advance received from customer journal entry is required when a business receives a cash payment from a customer in advance of delivering goods or services. This type of situation might occur for example when a business demands cash in advance to pay for materials on a large or bespoke order or as a rental deposit on a property.

    Month revenue recognition

    nov-01 1.000

    dic-01 1.000

    ene-02 1.000

    feb-02 1.000

    mar-02 1.000

    abr-02 1.000

    6.000
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