Washington Law Firm performed legal services for a client who could not pay immediately. The business expected to collect the $16,000 the following month. Later, the business received $9,600 cash from the client.
Requirements
1. Record the two transactions for Washington Law Firm. Include an explanation for each transaction.
2. Open these T-accounts: Cash; Accounts receivable; Service revenue. Post to all three accounts. Compute each T-account’s balance, and denote as Bal.
3. Answer these questions based on your analysis:
a. How much did the business earn? Which account shows this amount?
b. How much in total assets did the business acquire as a result of the two transactions?
Identify each asset and show its balance.