The cash of a business is increased due to a customer paying for services rendered. How should you journalize this transaction?

Question

Debit cash and credit capital

Debit cash and credit fees earned

Debit equity and credit cash

Debit fees earned and credit cash

Answer 1

In this scenario, the correct way to journalize the transaction where a customer pays for services rendered is:

Debit cash and credit fees earned.

This records the increase in cash (an asset) as a result of the payment, and it recognizes the revenue earned (fees earned) by crediting that account.