Question

following are transactions for valdez services, a company owned by b. valdez.

a. b. valdez invested $20,000 cash in the company in exchange for common stock.
b. the company provided services to a client and immediately received $900 cash.
c. the company received $10,000 cash from a client in advance for services to be provided next year.
d. the company received $3,500 cash from a client in partial payment of accounts receivable.

Explanation:

Analyze transaction a

Analyze the accounts affected.
B. Valdez invested \$20,000 cash in exchange for common stock.

• Cash (Asset) increases by \$20,000. Debit Cash.
• Common Stock (Equity) increases by \$20,000. Credit Common Stock.

Analyze transaction b

Analyze the accounts affected.
The company provided services to a client and immediately received \$900 cash.

• Cash (Asset) increases by \$900. Debit Cash.
• Service Revenue (Revenue) increases by \$900. Credit Service Revenue.

Analyze transaction c

Analyze the accounts affected.
The company received \$10,000 cash in advance for services to be provided next year.

• Cash (Asset) increases by \$10,000. Debit Cash.
• Unearned Revenue (Liability) increases by \$10,000. Credit Unearned Revenue.

Analyze transaction d

Analyze the accounts affected.
The company received \$3,500 cash from a client in partial payment of accounts receivable.

• Cash (Asset) increases by \$3,500. Debit Cash.
• Accounts Receivable (Asset) decreases by \$3,500. Credit Accounts Receivable.

Answer:

Transaction	Debit	Credit
b	Cash \$900	Service Revenue \$900
c	Cash \$10,000	Unearned Revenue \$10,000
d	Cash \$3,500	Accounts Receivable \$3,500