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add11 · Sep 2, 2009, 03:24 PM

The following in a summary of the transactions for the year:

Sales of services, $100,000, of which $30,000 was on credit.

I think the on credit is throwing me off.

Do you debit service revenue $100,000 and credit accounts payable $30,000 and cash $70,000 or am I going at this all wrong?

36teen · Sep 3, 2009, 12:07 PM

Couldn't you use accounts receivable instead of service revenue? Because you're getting the money, and when you go to make your t-charts its more condensed?

morgaine300 · Sep 4, 2009, 12:09 AM

add11, no.

36teen, no. (And I'm not sure what being "more condensed" means. You also don't use receivables instead of revenue -- revenue is revenue and receivables is receivables - they aren't interchangeable.)

You're making a sale - that's revenue. But you're recording it as though you're the one who owes someone else and that you're the one who paid cash. No -- someone paid you cash and owes you.

You've got the right concept of the split between credit and cash. But you've got the whole thing backwards.