Question

on may 10, a business collected $4,200 on account. what journal entry is needed on that date?
a. debit accounts payable for $4,200 and credit revenue for $4,200.
b. debit cash for $4,200 and credit accounts receivable for $4,200.
c. debit accounts receivable for $4,200 and credit revenue for $4,200.
d. debit cash for $4,200 and credit revenue for $4,200.

Explanation:

When a business collects an amount on account, cash is increased (debit cash) and the accounts - receivable balance is decreased (credit accounts receivable) as the customer is paying off an existing debt.

Answer:

B. Debit Cash for $4,200 and credit Accounts Receivable for $4,200.