Sparkle Cleaning Crew provides cleaning services for business offices. Each customer would normally pay $250...
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Accounting
Sparkle Cleaning Crew provides cleaning services for business offices. Each customer would normally pay $250 per month for office cleaning. For new customers, Sparkle Cleaning Crew offers an incentive of $200 per month if the customer pays for 3 months in advance or $600. On April 1, the accountant received $600 from a new business customer for services to be completed in April, May and June. The accountant debited Cash $600 and credited Cleaning Service Income $600.
1) What do you see is wrong with this entry?
2) How should deferred income be handled?
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