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GreenLawn Co. provides landscaping services to clients. On May 1, a customer paid GreenLawn $60,000 for 6-months services in advance. GreenLawn’s general journal entry to record this transaction will include a __________.

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Answer:

See answer below

Explanation:

Journal entry will be as follows.

Debit Cash Account $60,000

Credit Payables/Service Prepayment Account $60,000.

As service is being rendered on a monthly basis (monthly income = [tex]\frac{60,000}{6} = 10,000[/tex]), the company will make the following journal entry.

Debit Payables/Service Prepayment Account $10,000

Credit Revenue $10,000.

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