Question

M&R Company provided $2,600 in services to customers in December. Those customers are expected to pay the company sometime in January following the company’s year-end.

Answer 1

Answer

--This case comes under the ambits of "Accrual System of Accounting".

--According to this Accrual System, the revenues are recognised when 'earned' whether the cash has been received for them or not.

--Hence, when services were provided but customer did not pay the amount, following entry will be provided:

Accounts title	Debit	Credit
Accounts receivables	$2,600
Service Revenue		$2,600
(to record earned revenue)

--When the customer pays these in January (next accounting period), following entry will be recorded:

Accounts title	Debit	Credit
Cash	$2,600
Accounts receivables		$2,600
(to record cash received)