Censing Company collected $5,000 from a customer on account.What journal entry will be prepared by Censing to record this transaction?
A) Debit Cash and credit Accounts Receivable.
B) Debit Cash and credit Service Revenue.
C) Debit Accounts Receivable and credit Service Revenue.
D) Debit Accounts Receivable and credit Cash.

Question

Quizplus · Accepted Answer

When Censing Company collects cash from a customer on account, it means they are receiving cash for a previous sale made on credit. Therefore, they will debit Cash to increase the cash account and credit Accounts Receivable to decrease the amount owed by the customer.

Censing Company Collected $5,000 from a Customer on Account