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CMA Foundation · Fundamentals of Financial and Cost Accounting · Journal and Ledger

Mehta & Sons, a trading firm, paid Rs 12,000 in cash as rent for its shop. Which journal entry correctly records this transaction?

The correct entry debits Rent A/c and credits Cash A/c for Rs 12,000. Rent is an expense, and expenses are debited under the nominal account rule. Cash goes out of the business, so the real account Cash is credited.

  1. ARent A/c Dr. 12,000 to Cash A/c 12,000Correct
  2. BCash A/c Dr. 12,000 to Rent A/c 12,000
  3. CLandlord A/c Dr. 12,000 to Rent A/c 12,000
  4. DRent A/c Dr. 12,000 to Capital A/c 12,000

Explanation

Rent is a nominal account representing an expense, so it is debited. Cash is a real account and goes out, so it is credited. Option B reverses the entry. Option C wrongly debits a personal account when rent is paid immediately in cash.

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