Answer to Question #257767 in Accounting for Milan

Question

Debit Receivable

Credit Contract Liability

• What does this journal entry mean?

Debit Contract Liability

Credit Revenue

• What does this journal entry mean?

Debit Contract Asset

Credit Revenue

• What does this journal entry mean?

Debit Receivable

Credit Contract Asset

Credit Revenue

• What does this journal entry mean?

Debit Cash

Credit Refund Liability

Credit Sales Revenue

• What does this journal entry mean?

Answer 1

Debit Receivable

Credit Contract Liability

It means that you have to debit the service or items required in the contract agreement and credit the contract liability amount since they owe you.

Debit Contract Liability

Credit Revenue

Since you have made a sale of a contract you credit the sales revenue and debit the cost of sales which is contract liability.

Debit Contract Asset

Credit Revenue

It means that you offer assets on contract and you have got someone interested in the assets and you have contracted therefore, the sales revenue you credit and the cost of sales which is contract asset you debit.

Debit Receivable

Credit Contract Asset

Credit Revenue

It means the contracted asset was made on credit and therefore you debit the debtors amount you are expecting, and credit sales revenue amount received and the balance of the contract asset to be paid.

Debit Cash

Credit Refund Liability

Credit Sales Revenue

It means that as the seller you have received some payment in the form of cash and therefore you debit it and credit the refund liability and creditors amount of sales to reduce the liabilities level.