On October 1, Mathis Company Entered into a Six-Month Contract \begin{array}{l}\text { Cash }&3,000\ \\\quad \text { Service Revenue }&3,000\\end{array}

question 8

Multiple Choice

On October 1, Mathis Company entered into a six-month contract with Lewis Company to provide custodial services on a daily basis. The terms of the contract state that the cost will be $3,000 per month and Mathis will bill Lewis at the end of every two months. If Mathis is a calendar year company, what is the appropriate adjusting entry at December 31?

• A)
• \(\begin{array}{l}
• \text { Cash }&3,000\ \\
• \quad \text { Service Revenue }&3,000\
• \end{array} \)
• B)
• \(\begin{array}{cc}
• \text { Accounts Receivable } & 3,000 \\
• \text { Service Revenue } & 3,000
• \end{array}\)
• C)
• Service Revenue \( \quad 3,000 \)
• Accounts Receivable \( \quad 3,000 \)
• D)
• \(\begin{array}{lr}
• \text { Accounts Receivable } & 3,000 \\
• \text { Cash } & 3,000
• \end{array}\)