Final answer:
The journal entry for selling old newspapers for 500 rupees is Debit: Cash Account; Credit: Newspaper Account, reflecting an increase in cash and a disposal of assets (old newspapers).
Step-by-step explanation:
The correct journal entry for selling old newspapers for rupees 500 on January 31st is Debit: Cash Account; Credit: Newspaper Account. In this transaction, cash is received, hence the cash account should be debited. On the other side, the old newspapers represent either inventory that is being sold or an asset disposal, hence the newspaper account should be credited as it is an income or a reduction in assets.
Accounting follows the rule of debit the receiver and credit the giver. When you sell something, your cash or bank balance increases, therefore, you debit the cash or bank account because it is the receiver. Since you're getting rid of the newspapers, the newspaper account represents the giver, and you credit this account.