Bayside Technical Services signed a contract on a sixminusmonth job for a client, starting on March 1. Bayside will collect $ 24 comma 000 from its customer when the job is finished but the revenue is earned evenly over the six months. On March 31, before adjusting entries are made, Bayside's Accounts Receivable account had a debit balance of $ 6 comma 000. After the March 31 monthly adjusting entry has been made, what will be the balance in Accounts Receivable? A. Debit balance of $24,000 B. Debit balance of $10,000 ° C. Credit balance of $20,000 D. Debit balance of $4,000

Question

Emeline

Business

21 August, 21:37

Bayside Technical Services signed a contract on a sixminusmonth job for a client, starting on March 1. Bayside will collect $ 24 comma 000 from its customer when the job is finished but the revenue is earned evenly over the six months. On March 31, before adjusting entries are made, Bayside's Accounts Receivable account had a debit balance of $ 6 comma 000. After the March 31 monthly adjusting entry has been made, what will be the balance in Accounts Receivable? A. Debit balance of $24,000 B. Debit balance of $10,000 ° C. Credit balance of $20,000 D. Debit balance of $4,000

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Brenna · Answer 1

The answer is: B) Debit balance of $10,000

Explanation:

Accounts Receivable account is an asset, and when assets increase, they have to be debited.

Before any adjustment was made, Accounts Receivable had a $6,000 balance. The new contract is worth $24,000 hat shall be divided into 6 months, which means $4,000 per month.

So at the end of the month the $4,000 form the new contract must be added to Accounts Receivable. This has to be done be a debit record of 6,000, so the adjusted balance of the account is 10,000.