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ABC Catering received $1240 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record the cash receipt. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

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Answer:

Explanation:

The journal entry is shown below:

Cash A/c Dr $1,240

       To Unearned Catering revenue A/c $1,240

(Being cash is received)

The cash account reflects the asset side and the unearned catering revenue reflects the liability side of the balance sheet.  

Since the cash is received so we debited the cash account and credited the unearned catering revenue with respect to the service provided in the next month