What is the journal entry for a credit sale?

• A. Debit Accounts Receivable; Credit Sales Revenue.
• B. Debit Inventory; Credit Accounts Payable.
• C. Debit Sales Revenue; Credit Accounts Receivable.
• D. Debit Cash; Credit Sales Revenue.

Answer: (A)

When you make a sale on credit, you’ve earned revenue but you haven’t collected cash yet, so you record an increase in Accounts Receivable and recognize the revenue. The asset account Accounts Receivable is debited, and the revenue account Sales Revenue is credited. So the entry is: Debit Accounts Receivable, Credit Sales Revenue.

If you’re also tracking cost of goods sold, you’d typically record an additional entry to reflect the cost of the sold inventory (Debit Cost of Goods Sold, Credit Inventory). The other options don’t fit a credit sale: cash isn’t received yet in a credit sale, and a debit to Revenue or a credit to Accounts Payable would misstate the accounts involved in this transaction.