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How would the following scenario be represented as a general journal entry?

  • Jan 1, 2011: Customer signs contract for $1000 and pays $500 as a down payment and agrees to pay the remaining $500 at a later date

I am VERY new to accounting but my guess is that we are dealing with 3 accounts: Cash, Accounts Receivable and Revenue. If this is correct, how would the journal entry look?

  • Better question for onstartups – bstpierre Apr 12 '11 at 2:07
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    It's more of a bookkeeping question than a startup question, so I think it's more appropriate here. – Joel Spolsky Apr 12 '11 at 2:23
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Hmm, let's see, I always get Credit and Debit mixed up, but I'll try:

Signing of the contract:

  • Debit Accounts Receivable $1000
  • Credit Revenue $1000

Receiving 500 deposit:

  • Credit Accounts Receivable $500
  • Debit Cash $500

When you are done Accounts Receivable will have $500 (because you are owed $500), Revenue will have $1000 (because you made $1000 on an accrual basis), and Cash will have $500 (because you have $500 in your pocket).

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