Q9. Cash payment
What does a journal entry look like when cash is paid?
A9. A decrease in cash is recorded on the credit side of a journal entry.
(1) Entity A paid $9,800 to purchase merchandise.
Journal entry:
| Debit | Credit | |
| Merchandise | 9,800 | |
| Cash | 9,800 |
[Note]
1. Increase in merchandise (asset): debit
2. Decrease in cash (asset): credit
(2) Entity B paid $27,000 to repay the borrowings.
Journal entry:
| Debit | Credit | |
| Borrowings | 27,000 | |
| Cash | 27,000 |
[Note]
1. Decrease in borrowings (liability): debit
2. Decrease in cash (asset): credit