TechnolOntario develops a website for a client and earns $1,500. They receive a payment of $900 cash, with the balance due in 30 days.
The journal entry would record this event as a $900 debit for cash assets as well as a $600 debit for accounts receivable. The entry would also show a $1,500 credit under revenue for services.
The financial statements would read:
To demonstrate how various business transactions and other economic events impact the financial statements, this series tracks the accounts of the first fiscal year of a fictional startup company called TechnolOntario, Inc. Common financial events are introduced and recorded one by one, and they accumulate on the financial statements as TechnolOntario’s fiscal year progresses.
Markle, K. (2004, August). Introduction to Accounting. Presentation delivered at Schulich School of Business, York University, Toronto, Canada.