What would be the correct journal entry to record a cash sale of \$20?

• A. Debit Accounts Receivable \$20; Credit Sales Revenue \$20
• B. Debit Sales Revenue \$20; Credit Cash \$20
• C. Debit Cash \$20; Credit Accounts Payable \$20
• D. Debit Cash \$20; Credit Sales Revenue \$20

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the nature of the transaction. A cash sale means the company receives cash immediately in exchange for goods or services provided. This impacts the Cash account and the Sales Revenue account.
2. Step 2: Identify the accounts involved. Since cash is received, the Cash account will be debited (increased). Sales Revenue, which represents income earned, will be credited (increased).
3. Step 3: Recall the accounting equation and double-entry bookkeeping principles. Debits increase asset accounts like Cash, while credits increase revenue accounts like Sales Revenue.
4. Step 4: Write the journal entry format. The debit entry will be: Debit Cash \$20. The credit entry will be: Credit Sales Revenue \$20.
5. Step 5: Ensure the journal entry balances. The total debits (\$20) must equal the total credits (\$20), maintaining the integrity of the accounting equation.