Jane Services Sells a Service Plan for Commercial Computer Maintenance

question 85

Essay

Jane Services sells a service plan for commercial computer maintenance. The price is $1,650 per year, paid in advance. On October 1, 2013, Jane sells a service plan to a new customer for cash. Provide the journal entry to record this transaction on October 1.

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Definitions:

Accounting

The organized logging, presenting, and scrutinizing of a corporation's monetary transactions.

Pass-Through Taxation

A tax treatment applied to certain business entities where profits are taxed only once, directly through the owners’ personal income, avoiding corporate income tax.

Entrepreneurship

The process of designing, launching, and running a new business or startup.

Expected Future Cash Flows

The projected amount of money a company expects to receive and pay out over future periods.