Merry Maidens Cleaning generally charges $120 for a detailed cleaning of a normal-size home. However, to generate additional business, Merry Maidens is offering a new-customer discount of 10%. On May 1, Ms. E. Pearson has Merry Maidens clean her house and pays cash equal to the discounted price.

Required:

Record the revenue earned by Merry Maidens Cleaning on May 1.

New price = $108

Explanation:

Given:

Old price for cleaning = $120

New discount rate = 10% = 10 / 100 = 0.1

Computation of new price for cleaning:

New price = Old price for cleaning (1-New discount rate)

New price = 120 (1-0.1)

New price = 120 (1-0.1)

New price = $108

                           Journal entry

Date    Account Title and Explanation   Debit   Credit

        Cash               A/c Dr.                         $108

         Service Revenue  A/c                           $108

                 (Being amount received from cleaning)

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