Question

Claremore Company received $7,000 as payment from Tulsa Company for a sale made on account in the previous month. Which of the following is the journal entry the company should record?

a) cash 7000
fees earned 7000
b) account receivable 7000
cash 7000
c) cash 7000
accounts receivable 7000
d) accounts receivable 7000
fees earned 7000

Answer 1

The correct journal entry for Claremore Company receiving a payment from Tulsa Company is to debit Cash and credit Accounts Receivable, which is option c). This records the receipt of cash and the reduction of the amount owed by Tulsa Company.

Step-by-step explanation:

The correct journal entry for Claremore Company receiving $7,000 as payment from Tulsa Company for a sale made on account in the previous month would reflect a decrease in Accounts Receivable and an increase in Cash. The correct option is:

c) Cash 7000
Accounts Receivable 7000

This entry is based on the double-entry accounting system, which requires that every transaction must be recorded in at least two accounts, with debits equaling credits.

To explain, initially, when the sale was made on the account, Claremore Company would have recorded a debit to Accounts Receivable and a credit to Fees Earned (or Sales Revenue). Therefore, when the cash payment is received, the company should debit Cash to increase the asset account and credit Accounts Receivable to decrease the amount owed by Tulsa Company.

Answer 2

The answer is "C"

Step-by-step explanation:

Cash account will be Debited by 7000 as the cash received from debtor ( Tulsa company) and Trade receivable will be credited by 7000 to reduce the amount of debt as it is now settled.