Puffing Billy Ltd sells goods to Mornington Ltd. The agreement between the two parties states that Mornington Ltd pays for the goods in advance of delivery which will occur in 12 months time. The control of the goods pass to Mornington Ltd at the date of delivery. Mornington Ltd pays $40 000 to Puffing Billy Ltd on 1 July 2019. Puffing Billy Ltd delivers the goods to Mornington Ltd on 1 July 2020.

Which one of the following is the correct journal entry as at 1 July 2019 for the transaction above?

Select one:

Dr Accrued Revenue $40,000

Cr Sales Revenue $40,000

None of these

Dr Cash $40,000

Cr Sales Revenue $40,000

Dr Cash $40,000

Cr Deferred Revenue $40,000

Dr Deferred Revenue $40,000

Cr Sales revenue $40,000