When recording a sale of patio furniture for cash in the Patio & Furniture department, which of the following is the correct journal entry?

• A. Debit Sales Revenue; Credit Cash
• B. Debit Cash; Credit Sales Revenue
• C. Debit Accounts Receivable; Credit Inventory
• D. Debit Inventory; Credit Cash

Answer: (B)

Verified step by step guidance

1. Understand the nature of the transaction: The sale of patio furniture for cash involves receiving cash and recognizing revenue from the sale. This is a cash transaction, not a credit transaction.
2. Identify the accounts affected: The accounts involved are 'Cash' (an asset account) and 'Sales Revenue' (a revenue account). Cash increases because the business receives money, and Sales Revenue increases because the business earns revenue from the sale.
3. Determine the accounting rule: According to the double-entry accounting system, every transaction affects at least two accounts. Assets (like Cash) increase with a debit, and revenues (like Sales Revenue) increase with a credit.
4. Apply the journal entry format: Debit the 'Cash' account to reflect the increase in assets, and credit the 'Sales Revenue' account to reflect the increase in revenue.
5. Review the incorrect options: The other options involve accounts like 'Accounts Receivable' and 'Inventory,' which are not relevant for a cash sale. 'Accounts Receivable' is used for credit sales, and 'Inventory' is adjusted when goods are sold but not directly credited in this case.