When an accountant records journal entries for a business, he records these entries as debits and credits, and they must balance. Here are a couple of practice questions to help you hone your journal entry — and balancing — skills.
Practice questions
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What is the journal entry to record a collection of $2,000 of outstanding accounts receivables?
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A company recorded a debit to an asset account for $1,000 and a credit to a liability account for $200. What else should be recorded to complete the journal entry?
Answers and explanations
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A debit to an asset account for $2,000 and a credit to another asset account for $2,000
Collection of outstanding receivables increases cash by $2,000 and decreases accounts receivable by $2,000. Therefore, an asset account (cash) should be debited (increased) $2,000, and another asset account (accounts receivable) should be credited (decreased) $2,000.
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Credit to another account for $800
The company has a debit of $1,000 and a credit of $200, so the entry doesn't balance. If you take the debit of $1,000 less the credit of $200, you can see the entry is off by a credit of $800. To make the entry balance, the company needs to record another credit of $800 and such a credit could be recorded to another account. The account could be a balance sheet or income statement account.
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