Question

Julie Lambert has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Lambert account for the cash received at the end of the engagement?
a.Cash
Unearned Consulting Revenue
b.Cash
Unearned Consulting Revenue
Earned Consulting Revenue
c. Prepaid Consulting Revenue
Earned Consulting Revenue
d. No entry is required when the engagement is concluded.

Answer 1

Answer:

b. Cash, Unearned Consulting Revenue; Earned Consulting Revenue

Explanation:

Lambert account for the cash received at the end of the engagement as stated below

Date   Account titles                                Debit   Credit

          Cash                                                XXX

          Unearned Consulting Revenue     XXX

                 Earned Consulting Revenue               XXX