Multiple Choice
When a store purchases a jacket for \$20.00 cash for inventory, which of the following is the correct journal entry?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
Fletcher Company collected the following data for the month: cash sales of \$5,000, credit sales of \$3,000, and received \$2,000 from customers on account. Which of the following is the correct journal entry to record the cash received from customers on account?
A
Debit Sales Revenue \$2,000; Credit Cash \$2,000
B
Debit Accounts Receivable \$2,000; Credit Cash \$2,000
C
Debit Cash \$2,000; Credit Accounts Receivable \$2,000
D
Debit Cash \$2,000; Credit Sales Revenue \$2,000
Verified step by step guidance1
Step 1: Understand the transaction. The problem involves recording cash received from customers on account. This means customers are paying off amounts they previously owed (Accounts Receivable).
Step 2: Recall the accounting principle. When cash is received, it increases the Cash account (an asset), which is debited. Simultaneously, the Accounts Receivable account (another asset) decreases, which is credited.
Step 3: Analyze the journal entry options provided. The correct entry should reflect the increase in Cash and the decrease in Accounts Receivable, as the payment is settling a prior credit sale.
Step 4: Match the correct journal entry. The correct entry is 'Debit Cash \$2,000; Credit Accounts Receivable \$2,000,' as it properly reflects the increase in cash and the reduction in receivables.
Step 5: Verify the logic. Ensure the journal entry aligns with the double-entry accounting system, where every debit has a corresponding credit, maintaining the balance in the accounting equation.
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