Answer:
Debit Cash $100,000
Credit Service Revenue $50,000
Credit Deferred revenue $50,000
Being two years retainer-ship income
Explanation:
The two years retainer-ship $100,000 income received is of two parts $50,000 is for the current financial year (year 2022) and the other $50,000 is income received in advance also called unearned or deferred income which is for year 2023.
The current year (year 2022) income is already earned and should form part of the income statement for the year and must be credited to service income account, while the portion received in advance should be credited to unearned revenue also called deferred revenue account. This is in line with accrual accounting principle, because it is money received for which services have not yet been rendered.
