Notified by Alex's Engineering Co that Success's bid of $9000 on a proposed project has been accepted. Alex's paid a $2500 cash advance to success systems.
My question is how am i going to put or write this transaction on journal entry? Do i just ignore 9000 and write 2500 cash debit and revenue. or do i include 9000? thank you in advance
You also need to do an entry for the difference of 6500.
do i record it in accounts receivable and revenue?
debit accounts recievable for 9000
credit sales revenue 9000
debit cash 2500
credit accounts recievable 2500
To properly record this transaction in a journal entry, you need to include both the $9,000 bid amount and the $2,500 cash advance. Here's how you would record it:
1. Identify the accounts involved:
- Cash: This account represents the cash advance paid by Alex's Engineering Co.
- Revenue: This account represents the income generated by the successful bid.
- Accounts Receivable: This account represents the amount owed by Alex's Engineering Co. to Success Systems for the remaining bid amount.
2. Understand the impact on the accounts:
- The $2,500 cash advance increases the Cash account.
- The $9,000 successful bid increases the Revenue account.
- Since Alex's Engineering Co paid a cash advance, there is no need to record the remaining bid amount as an Accounts Receivable.
3. Write the journal entry:
The journal entry will include two lines: one for the cash advance and one for the revenue earned from the successful bid.
| Account | Debit ($) | Credit ($) |
|---------------------|-----------|------------|
| Cash | 2,500 | |
| Revenue | | 9,000 |
In this example, you would debit the Cash account for $2,500 (to increase the account) and credit the Revenue account for $9,000 (to record the income generated).
Please note that the specific accounts and amounts used may vary based on your business's chart of accounts and accounting practices. It's always recommended to consult with a professional accountant or follow your organization's guidelines when recording transactions.