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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

What is the entry to record the cash received on a sale of $500, credit terms 1/15, n/30, if the payment is received within the discount period?

  1. a. Accounts Receivable 500 DR; Cash 500 CR
  2. b. Cash 500 DR; Accounts Receivable 500 CR
  3. c. Cash 495 DR, Sales Discount 5 DR; Accounts Receivable 500 CR
  4. d. Accounts Receivable 500 DR; Cash 495 CR, Sales Discount 5 CR
  5. e. Cash 500 DR; Sales Discount 5 CR, Accounts Receivable 495 CR

To determine

Identify the correct entry for the cash received on sale.

Explanation

Record the journal entry for the cash received on sale.

DateAccount Title and explanation

Debit

($)

Credit ($)
 Cash (Working Note 2)495 
 Sales Discount ( Working Note 1)5 
 Accounts receivable 500
 (To record the cash received on sale )  

Table (1)

  • Cash is an asset and there is an increase in the value of an asset. Hence, debit the cash.
  • Sales discount is a contra revenue account and it is decreased. Hence, debit the sales discount.
  • Accounts receivable is a current asset and it is decreased. Hence, credit the accounts receivable.

Working Note 1:

Calculate sales discount...

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