The Following Transactions Occurred During July

question 18

Multiple Choice

The following transactions occurred during July:
1.Received $800 cash for services performed during July.
2.Received $5,000 cash from the issuance of common stock to owners.
3.Received $400 from a customer as payment for services performed during June.
4.Billed $3,500 to customers for services performed on account in July.
5.Borrowed $2,500 from the bank and signed a promissory note.
6.Received $1,000 from a customer for services to be performed during August.
-Use the information above to answer the following question.Which of the following statements about the recording of these transactions is correct?

• A) Transaction #1 would include a debit to Service Revenue.
• B) Transaction #3 would include a debit to Accounts Receivable.
• C) Transaction #4 would include a debit to Accounts Receivable.
• D) Transaction #6 would include a debit to Unearned Revenue.

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Definitions:

Income-Splitting

A tax strategy used by families or partnerships to divide income amongst members to lower the overall tax liability by utilizing lower tax brackets.

Back Pay

Compensation owed to an employee for a past period, typically due to underpayment or wage disputes.

Tax Purposes

Motivations or reasons related to the calculation, payment, or avoidance of taxes.

Illegal Contracts

Agreements that are not enforceable by law due to their involvement in illegal activities or because they contravene public policy.