Debits and Credits
The new bookkeeper for Darby Corporation is getting ready to mail the daily cash receipts to the
bank for deposit. Because his previous job was at a bank, he is aware that the bank “credits” an
account for all deposits and “debits” an account for all checks written. Therefore, he makes the
following entry before sending the daily receipts to the bank:
Explain why that entry is wrong and prepare the correct journal entry. Why does the bank refer
to cash received from a customer as a credit to that customer’s account?