On May 10,a business collected $4,200 on account.What journal entry is needed on that date?
A)Debit Cash for $4,200 and credit Revenue for $4,200.
B)Debit Accounts Receivable for $4,200 and credit Revenue for $4,200.
C)Debit Cash for $4,200 and credit Accounts Receivable for $4,200.
D)Debit Accounts Payable for $4,200 and credit Revenue for $4,200.

Question

Quizplus · Accepted Answer

When a business collects money on account, it means it is receiving payment for a previous sale that was made on credit. The correct journal entry increases Cash (a debit to the asset account) and decreases Accounts Receivable (a credit to the asset account) to reflect the collection of the owed amount.

On May 10,a Business Collected $4,200 on Account