{"id":205370,"date":"2025-03-24T11:24:08","date_gmt":"2025-03-24T11:24:08","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=205370"},"modified":"2025-03-24T11:24:10","modified_gmt":"2025-03-24T11:24:10","slug":"greenlawn-co-provides-landscaping-services-to-clients","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/24\/greenlawn-co-provides-landscaping-services-to-clients\/","title":{"rendered":"GreenLawn Co provides landscaping services to clients"},"content":{"rendered":"\n<p>GreenLawn Co provides landscaping services to clients. On May 1, a customer paid GreenLawn $70,000 for 6 months services in advance. GreenLawn\u2019s general journal entry to record this transaction will include a:<\/p>\n\n\n\n<p>Debit to Unearned Revenue for $70,000.<br>Credit to Accounts Receivable for $70,000<br>Credit to Cash for $70,000<br>Credit to Unearned Revenue for $70,000<br>Debit to Accounts Receivable for $70,000<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/03\/image-1286.png\" alt=\"\" class=\"wp-image-205371\"\/><\/figure>\n\n\n\n<p>When GreenLawn Co receives $70,000 on May 1 for six months of landscaping services to be provided in the future, it has an obligation to deliver these services over the next six months. In accrual accounting, revenue is recognized when it is earned, not when cash is received. Therefore, the payment is initially recorded as unearned revenue, a liability representing GreenLawn&#8217;s obligation to perform the services.<\/p>\n\n\n\n<p>The correct journal entry to record this transaction is:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Debit<\/strong> Cash for $70,000, increasing the company&#8217;s cash balance.<\/li>\n\n\n\n<li><strong>Credit<\/strong> Unearned Revenue for $70,000, recognizing the liability for services to be performed.<\/li>\n<\/ul>\n\n\n\n<p>This entry reflects the receipt of cash and the corresponding obligation to provide services in the future.<\/p>\n\n\n\n<p>As GreenLawn performs the services each month, it will recognize a portion of the unearned revenue as earned revenue. For example, each month, $11,666.67 ($70,000 \u00f7 6 months) will be recognized as revenue. The adjusting journal entry at the end of each month would be:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Debit<\/strong> Unearned Revenue for $11,666.67, reducing the liability.<\/li>\n\n\n\n<li><strong>Credit<\/strong> Service Revenue for $11,666.67, recognizing the earned revenue.<\/li>\n<\/ul>\n\n\n\n<p>This process continues until all services are rendered and the unearned revenue is fully recognized as earned revenue.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>GreenLawn Co provides landscaping services to clients. On May 1, a customer paid GreenLawn $70,000 for 6 months services in advance. GreenLawn\u2019s general journal entry to record this transaction will include a: Debit to Unearned Revenue for $70,000.Credit to Accounts Receivable for $70,000Credit to Cash for $70,000Credit to Unearned Revenue for $70,000Debit to Accounts Receivable [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-205370","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/205370","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=205370"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/205370\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=205370"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=205370"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=205370"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}