On June 30, Parrott Company sold goods for $800 on account. The journal entry to record the recognition of revenue would include

Question

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The recognition of revenue from the sale would involve a credit to sales revenue, as revenue is recognized when goods or services are sold. Since the sale was made on account, there would also be a credit to accounts receivable, but this is not part of the journal entry to recognize revenue. Option A, a debit to cash, is incorrect since no cash was received at the time of the sale, and Option B, a debit to sales revenue, is incorrect since sales revenue is a credit balance account.

On June 30, Parrott Company Sold Goods for $800 on Account