Recording rent receipt via bank transfer

Steps:

• Identify the transaction: Paul pays rent to John by credit transfer, increasing John's bank balance.
• Apply double-entry rules: Debit to increase assets (bank), credit to decrease assets (rent receivable).
• Confirm accounts: Rent receivable decreases as payment is received; bank increases via transfer.
• Select matching entry: Debit bank, credit rent receivable.

Why A is correct:

• In double-entry bookkeeping, receiving payment reduces the asset "rent receivable" (credit) and increases the asset "bank" (debit), per the fundamental equation Assets = Liabilities + Equity.

Why the others are wrong:

• B: Uses "cash" instead of "bank," but payment is by credit transfer, not physical cash.
• C: Reverses the entry; debiting rent receivable increases it, which is incorrect for payment receipt.
• D: Reverses the entry and uses "cash," both wrong for a bank transfer reducing receivable.

Final answer: A