Fletcher Company collected the following data for the month: cash sales of \$5,000, credit sales of \$3,000, and received \$2,000 from customers on account. Which of the following is the correct journal entry to record the cash received from customers on account?

• A. Debit Sales Revenue \$2,000; Credit Cash \$2,000
• B. Debit Accounts Receivable \$2,000; Credit Cash \$2,000
• C. Debit Cash \$2,000; Credit Accounts Receivable \$2,000
• D. Debit Cash \$2,000; Credit Sales Revenue \$2,000

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the transaction. The problem involves recording cash received from customers on account. This means customers are paying off amounts they previously owed (Accounts Receivable).
2. Step 2: Recall the accounting principle. When cash is received, it increases the Cash account (an asset), which is debited. Simultaneously, the Accounts Receivable account (another asset) decreases, which is credited.
3. Step 3: Analyze the journal entry options provided. The correct entry should reflect the increase in Cash and the decrease in Accounts Receivable, as the payment is settling a prior credit sale.
4. Step 4: Match the correct journal entry. The correct entry is 'Debit Cash \$2,000; Credit Accounts Receivable \$2,000,' as it properly reflects the increase in cash and the reduction in receivables.
5. Step 5: Verify the logic. Ensure the journal entry aligns with the double-entry accounting system, where every debit has a corresponding credit, maintaining the balance in the accounting equation.