Multiple Choice
Alan is recording payroll that was processed outside of QuickBooks. Which of the following journal entries correctly records the payment of employee wages?
101
views
2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
An electronic goods store sells a laptop for \$1,200 cash. Which of the following is the correct journal entry to record this transaction?
A
Debit Cash \$1,200; Credit Sales Revenue \$1,200
B
Debit Inventory \$1,200; Credit Cash \$1,200
C
Debit Sales Revenue \$1,200; Credit Cash \$1,200
D
Debit Accounts Receivable \$1,200; Credit Sales Revenue \$1,200
Verified step by step guidance1
Step 1: Understand the nature of the transaction. The store sells a laptop for \$1,200 cash, which means cash is received immediately, and revenue is earned from the sale of the laptop.
Step 2: Identify the accounts involved. The accounts affected are 'Cash' (an asset account) and 'Sales Revenue' (a revenue account). Since cash is received, it increases the asset account, and since revenue is earned, it increases the revenue account.
Step 3: Determine the type of account changes. Cash is an asset account, and receiving cash increases assets, so it should be debited. Sales Revenue is a revenue account, and earning revenue increases revenue, so it should be credited.
Step 4: Apply the journal entry format. The journal entry should follow the format: Debit the account that increases (Cash) and Credit the account that increases (Sales Revenue).
Step 5: Write the journal entry. The correct journal entry is: Debit Cash \$1,200; Credit Sales Revenue \$1,200. This reflects the increase in cash and the recognition of revenue from the sale.
Related Videos
Related Practice
