Questions: No. 1: Accepted 36,000 on April 1, Year 1 as a retainer for services to be performed evenly over the next 12 months. Debit: [Select] Credit: [Select]

No. 1: Accepted 36,000 on April 1, Year 1 as a retainer for services to be performed evenly over the next 12 months. Debit: [Select] Credit: [Select]
Transcript text: No. 1: Accepted $\$ 36,000$ on April 1, Year 1 as a retainer for services to be performed evenly over the next 12 months. Debit: $\square$ [Select] Credit: $\square$ $\square$ [Select]
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Solution

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To record the transaction of accepting $36,000 on April 1, Year 1 as a retainer for services to be performed evenly over the next 12 months, we need to recognize the receipt of cash and the creation of a liability (unearned revenue) since the services have not yet been performed.

Journal Entry:

Debit: Cash $36,000

Credit: Unearned Revenue $36,000

Explanation:

  • Debit: Cash $36,000: This entry increases the cash account because the company has received $36,000 in cash.
  • Credit: Unearned Revenue $36,000: This entry increases the unearned revenue account, which is a liability account. It represents the obligation to perform services in the future.

So, the completed journal entry would be:

Debit: Cash $36,000

Credit: Unearned Revenue $36,000

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