Question

For each situation, prepare the journal entry to record the subsequent cash transaction in 2026.

a) Purchase of equipment for $5,000 in cash
b) Sale of goods for $3,000 cash
c) Payment of $2,500 rent in cash
d) Receipt of $1,200 cash for services provided

Answer 1

Journal entries for cash transactions involve debiting and crediting the appropriate accounts to reflect the economic events. The purchase of equipment and payment of rent result in a debit to an expense or asset account and a credit to Cash.

Step-by-step explanation:

When recording the subsequent cash transactions for the year 2026 related to the various scenarios provided, the journal entries would reflect the movement of cash and the corresponding accounts affected by the transactions. Here are the entries:

• For the purchase of equipment for $5,000 in cash, the journal entry would be:
  Debit: Equipment $5,000
  Credit: Cash $5,000

• For the sale of goods for $3,000 cash, the journal entry would be:
  Debit: Cash $3,000
  Credit: Sales Revenue $3,000

• For the payment of $2,500 rent in cash, the journal entry would be:
  Debit: Rent Expense $2,500
  Credit: Cash $2,500

• For the receipt of $1,200 cash for services provided, the journal entry would be:
  Debit: Cash $1,200
  Credit: Service Revenue $1,200