What should be the general entries for a revenue which was earned in 2007 but not received till January 2008. Please tell me entries for both year 2007 and 2008. I mean, what entry should I make at the end of 2007 for the income I earned but not received, and what would be the entries for the money I received in January 2008, earned Last year. Thank you.
To account for revenue that was earned in 2007 but not received until January 2008, you would need to make the following journal entries for both years:
Entry for 2007 (Unearned Revenue):
1. Debit: Accounts Receivable (or Customer Name) - This shows the amount of revenue earned but not yet received.
2. Credit: Revenue - This recognizes the revenue in the 2007 financial statements as it was earned.
Entry for 2008 (Revenue Received):
1. Debit: Cash (or Bank Account) - This records the amount of cash received in January 2008.
2. Credit: Accounts Receivable (or Customer Name) - This offsets the previously recorded Accounts Receivable from 2007.
3. Credit: Revenue - This reduces the revenue recognized on the 2007 financial statements to reflect that it has now been received in 2008.
By making these entries, you correctly record the unearned revenue in 2007 and recognize it as revenue in 2008 when it is received.