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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Lindley Enterprises sells hand woven rugs. Paige Corporation is a regular customer of Lindley. On June 30, Paige purchased 500 rugs from Lindley for $400,000 on credit. On August 15, Paige paid Lindley in full on its $400,000 balance. Prepare the related journal entries for Lindley.

To determine

Prepare necessary journal entries to record the given transaction.

Explanation

Accounts receivable:

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Prepare journal entry to record the given transaction.

DateAccount Titles and explanationDebit ($)Credit ($)
June 30Accounts receivable400,000 
      Sales revenue 400,000
 (To record the sale of rugs on June 30 to Corporation P)  

Table (1)

  • Accounts receivable is an asset and there is an increase in the value of asset. Hence, debit the accounts receivable by $400,000...

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