The new bookkeeper for Darby Corporation is getting ready to mail the daily cash receipts to the

Question:

The new bookkeeper for Darby Corporation is getting ready to mail the daily cash receipts to the bank for deposit. Because his previous job was at a bank, he is aware that the bank “credits” an account for all deposits and “debits” an account for all checks written. Therefore, he makes the following entry before sending the daily receipts to the bank:

June 5 Accounts Receivable 10,000

Sales Revenue 2,450

Cash 12,450

To record cash received on June 5: $10,000

collections on account and $2,450 in cash sales.

Required

Explain why that entry is wrong and prepare the correct journal entry. Why does the bank refer to cash received from a customer as a credit to that customer’s account?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...