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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

When $300 plus sales tax of 6% is received for an amount previously owed, Cash is debited for what amount?

  1. (a) $18
  2. (b) $318
  3. (c) $300
  4. (d) $282

To determine

Find the correct option, the option that indicates the correct amount of debit to Cash

Explanation

Sale: Sale is an exchange transaction of merchandise wherein the seller transfers the ownership of asset or goods to buyer, for money.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Prepare journal entry to record the receipt of cash from sale on account transaction.

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
Cash318
Accounts Receivable318
(Record cash receipt)

Table (1)

Description:

  • Cash is an asset account...

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