On October 3, Josh Antonio, a carpenter, received a cash payment for services previously billed to a client. Josh paid his telephone bill, and he also bought supplies on credit. For the three transactions, at least one of the entries will include a
A) credit to Retained Earnings.
B) credit to Notes Payable.
C) debit to Accounts Receivable.
D) credit to Accounts Payable.

Question

Quizplus · Accepted Answer

Since Josh bought supplies on credit, there will be a credit to Accounts Payable. There is no indication that Retained Earnings or Notes Payable are involved in these transactions. However, since the cash payment was received for services previously billed, there may also be a debit to Accounts Receivable.

On October 3, Josh Antonio, a Carpenter, Received a Cash