Proper Journal Entry for $170 Receipt of a Bill Sent to a Customer

What is the proper journal entry to record the $170 receipt of a bill sent to a customer last month?

A. Dr Cash 170, Cr Accounts Receivable 170

B. Dr Fees Earned 170, Cr Accounts Receivable 170

C. Dr Fees Earned 170, Cr Cash 170

D. Dr Accounts Receivable 170, Cr Cash 170

Correct Journal Entry:

The proper journal entry to record the $170 receipt of a bill sent to a customer last month would be: Dr Cash 170, Cr Accounts Receivable 170.

Properly recording financial transactions is crucial for accurate financial reporting. In this case, the $170 receipt of cash from a customer for an outstanding bill needs to be recorded with the appropriate journal entry.

The correct journal entry is A. Dr Cash 170, Cr Accounts Receivable 170. This entry reflects the receipt of cash from a customer for an outstanding bill. The debit to Cash increases the cash balance, indicating an inflow of funds, while the credit to Accounts Receivable reduces the outstanding balance in the Accounts Receivable account.

By debiting Cash for $170, the entry acknowledges the increase in cash balance due to the receipt of cash. At the same time, crediting Accounts Receivable for $170 recognizes the customer's payment of the outstanding bill, reducing their balance owed.

It is important to accurately record transactions like these to ensure the financial statements reflect the true financial position of the business. This proper journal entry ensures that the cash receipt and reduction in accounts receivable are accurately recorded.