What does a journal entry look like when cash is paid?



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

 

 

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