Beachside Coffee Shop, in an effort to streamline its accounting system, has decided to utilize a cash receipts journal in its operations. If the company records the cash sale of food for $18, which is the correct entry?

Question

Business

Senior

18 May, 07:22

Beachside Coffee Shop, in an effort to streamline its accounting system, has decided to utilize a cash receipts journal in its operations. If the company records the cash sale of food for $18, which is the correct entry?

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Answers (1)

Know the Answer?

Joyce Clayton · Answer 1

the available options for the question are,

A. Cash Cr. $18, Food Revenue Dr. $18,

B. Cash Dr. $18, Food Revenue Dr. $18

C. Cash Dr. $18, Food Revenue Cr. $18

D. Cash Cr. $18, Food Revenue Cr. $18

and the correct answer is C. Cash Dr. $18, Food Revenue Cr. $18

Explanation:

the answer is simple. once they implement the accounting system, all the transaction will have at least a double entry.

when a cash sale is made for $18, this is a revenue stream for the business, while the cash balance of the business increases as well. Revenue account is an income and an increase in income is treated as increase in credit while the cash balance is an asset, and the increase of the asset is treated as a debit.

if you look at options A, B and D, all of these transactions are either mixed up or have both credits or debits which is wrong, because of this, only the answer C is correct.