The Laramie Company operates a consulting practice. New clients are required to pay the firm in two transactions. First, clients must pay $200 before receiving consulting services. Second, clients must pay $1,800 once the consulting firm finishes providing services to the client. How does The Laramie Company account for the second transaction?
a. Debit the Cash account for $200 and credit the Unearned Revenue account for $200.
b. Debit the Cash account for $2,000 and credit the Service Revenue account for $2,000.
c. Debit the Cash account for $200 and credit the Prepaid Service account for $200.
d. Debit the Cash account for $1,800, debit the Unearned Revenue account for $200, and credit the Service Revenue account for $2,000.
e. Debit the Cash account for $200, debit the Prepaid Service account for $1,800, and credit the Service Revenue account for $2,000.
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