Multiple Choice
1. If MKH Company sold land in 20X1 for \$45,000 that had a book value of \$50,000, what amount of loss on the sale of land should be recorded in the journal entry?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
When recording bank deposits in the journal, which of the following is required?
A
Debit the Cash account to increase its balance.
B
Debit the Bank Fees account to increase its balance.
C
Credit the Revenue account to decrease its balance.
D
Credit the Cash account to increase its balance.
Verified step by step guidance1
Understand the nature of the transaction: A bank deposit increases the cash balance in the company's account. This is an inflow of cash, which affects the Cash account in the journal.
Recall the accounting principle of debits and credits: Debits increase asset accounts (like Cash), while credits decrease asset accounts. Conversely, credits increase revenue accounts, and debits decrease revenue accounts.
Determine the correct account to debit: Since the deposit increases the Cash account, you need to debit the Cash account to reflect the increase in the journal.
Evaluate the other options: Debit the Bank Fees account is incorrect because bank fees are an expense, not related to deposits. Credit the Revenue account is incorrect because revenue is not being decreased in this transaction. Credit the Cash account is incorrect because credits decrease asset accounts, which is not the case here.
Record the transaction in the journal: Debit the Cash account to increase its balance, and credit the corresponding account (e.g., Revenue or Accounts Receivable) to reflect the source of the deposit.
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