Journalizing a Business Transaction – Example 6
On Jan 13th, 'X' business received check No. 308 for $400 as payment for providing services to Renaldo Company. The check was for the full payment.
Step 1: Analysis:
The accounts affected in the transaction are:
- Cash in Bank
- Service Revenue Account
- Cash in Bank is an Asset account
- Service Revenue account is a Revenue account
- Cash in Bank increases by $400
- Service Revenue account increases by $400
Step 2: Debit – Credit Rule:
- Increase in the Asset account is recorded as debit. Debit Cash in Bank for $400.
- Increase in the Service Revenue account is recorded as credit. Credit the Service Revenue account for $400.
Step 3: Prepare a T Account:
Step 4: Pass a Journal Entry:
