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On 1 June a company pays $2,000 rent for the month. What is the correct journal entry?
ADebit Cash $2,000; credit Rent Expense $2,000
BDebit Rent Expense $2,000; credit Fees Earned $2,000
CDebit Rent Expense $2,000; credit Cash $2,000
DDebit Cash $2,000; credit Accounts Payable $2,000
Answer & Solution
Correct answer: C. Debit Rent Expense $2,000; credit Cash $2,000
1. Identify the two accounts: Rent Expense and Cash.
2. Rent Expense is an expense that is increasing, so it is debited.
3. Cash is an asset that is decreasing because it is paid out, so it is credited.
4. Option A reverses the entry; option C uses revenue instead of cash; option D wrongly creates a payable for a cash payment.
5. Therefore debit Rent Expense $2,000 and credit Cash $2,000.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.3.3 "Journalizing Transactions", p.14_
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