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On 5 June a customer pays $800 cash for a service the company provided that day. What is the correct journal entry?
ADebit Cash $800; credit Fees Earned $800
BDebit Fees Earned $800; credit Cash $800
CDebit Cash $800; credit Accounts Receivable $800
DDebit Accounts Receivable $800; credit Fees Earned $800
Answer & Solution
Correct answer: A. Debit Cash $800; credit Fees Earned $800
1. Identify the accounts: Cash received and Fees Earned earned.
2. Cash is an asset that is increasing, so it is debited.
3. Fees Earned is revenue that is increasing, so it is credited.
4. Option A reverses the entry; option C wrongly credits a receivable; option D applies only when billed on account, not paid in cash.
5. Therefore debit Cash $800 and credit Fees Earned $800.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.3.3 "Journalizing Transactions", p.14_
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