Musa, a prepaid customer of XYZ and KLM, bought ₦1500 recharge card from XYZ, and ₦2000 recharge recharge card from KLM, for business calls. The entry to re...

Musa, a prepaid customer of XYZ and KLM, bought ₦1500 recharge card from XYZ, and ₦2000 recharge recharge card from KLM, for business calls. The entry to record these transaction is debit?

Answer Details

The correct entry to record the transaction is: Telephone ₦3,500, Credit Cash ₦3,500 This is because the customer Musa bought recharge cards from two different companies, XYZ and KLM, and paid cash for the cards. The entry to record the transaction should show an increase in the Telephone account (as this represents the value of the airtime purchased), and a decrease in the Cash account (as the customer paid for the recharge cards with cash). Therefore, the account to be debited is Cash, while the account to be credited is Telephone.