A Law Firm Collected $1,800 on Account for Work Performed

question 142

Multiple Choice

A law firm collected $1,800 on account for work performed in the previous month.Which of the following general journal entries will the firm make to record this collection of cash?

• A)Debit Accounts Receivable,$1,800; credit Unearned Legal Fees Revenue,$1,800.
• B)Debit Cash,$1,800; credit Unearned Legal Fees Revenue,$1,800.
• C)Debit Legal Fees Revenue,$1,800; credit Accounts Receivable,$1,800.
• D)Debit Accounts Receivable,$1,800; credit Legal Fees Revenue,$1,800.
• E)Debit Cash,$1,800; credit Accounts Receivable,$1,800.

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Definitions:

Borrowers

Individuals or entities that receive funds from a lender with the agreement to repay the borrowed amount plus interest.

Lenders

Individuals or institutions that provide funds to borrowers under the condition of being repaid with interest.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the real yield on an investment.

Actual Rate

The real, observed interest rate in the market, not adjusted for inflation.