Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 23, assuming the customer made the correct payment on that date? Transaction Account Title Debit CreditA. Cash 45,540 A. Sales Revenue 460 A. Accounts Receivable 46,000B. Cash 46,000 B. Sales Discounts 460 B. Accounts Receivable 46,000B. Interest Revenue 460C. Cash 45,540 C. Sales Discounts 460 C. Accounts Receivable 46,000D. Cash 46,000 D. Accounts Receivable 45,540D. Sales Revenue 460
Question
Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 23, assuming the customer made the correct payment on that date? Transaction Account Title Debit CreditA. Cash 45,540 A. Sales Revenue 460 A. Accounts Receivable 46,000B. Cash 46,000 B. Sales Discounts 460 B. Accounts Receivable 46,000B. Interest Revenue 460C. Cash 45,540 C. Sales Discounts 460 C. Accounts Receivable 46,000D. Cash 46,000 D. Accounts Receivable 45,540D. Sales Revenue 460
Solution
The correct answer is C.
Here's the step-by-step explanation:
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Oswego Clay Pipe Company provided services to Southeast Water District #45 worth 46,000.
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The terms of the sale are 1/15, n/60. This means that the customer gets a 1% discount if they pay within 15 days. The "n/60" means that the full amount is due within 60 days.
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The customer made the correct payment on April 23, which is within the 15-day discount period. Therefore, they are entitled to a 1% discount on the 460.
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Oswego would record a Sales Discount of $460. This is a contra-revenue account, which reduces the Sales Revenue.
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The cash received from the customer would be the original amount of 460, which equals $45,540.
So, the correct journal entry would be:
- Debit Cash $45,540
- Debit Sales Discounts $460
- Credit Accounts Receivable $46,000
This corresponds to option C in your list.
Similar Questions
Oswego Clay Pipe Company provides services of $46,000 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 23, assuming the customer made the correct payment on that date? Transaction Account Title Debit CreditA. Cash 45,540 A. Sales Revenue 460 A. Accounts Receivable 46,000B. Cash 46,000 B. Sales Discounts 460 B. Accounts Receivable 46,000B. Interest Revenue 460C. Cash 45,540 C. Sales Discounts 460 C. Accounts Receivable 46,000D. Cash 46,000 D. Accounts Receivable 45,540D. Sales Revenue 460
Use an example of a water utility Company
Company produces pipes for concert-quality organs. Each job is unique. In April 2021, it completed all outstanding orders, and then, in May 2021, it worked on only two jobs, M1 and M2:Rafael Company, May 2021 Job M1 Job M2Direct materials $79,000 $56,000Direct manufacturing labour $277,000 $205,000Direct manufacturing labour is paid at the rate of $25 per hour. Manufacturing overhead costs are allocated at a budgeted rate of $16 per direct manufacturing labour-hour. Only Job M1 was completed in May. Compute the total cost for Job M1.
Company produces pipes for concert-quality organs. Each job is unique. In April 2021, it completed all outstanding orders, and then, in May 2021, it worked on only two jobs, M1 and M2:Rafael Company, May 2021 Job M1 Job M2Direct materials $79,000 $56,000Direct manufacturing labour $277,000 $205,000Direct manufacturing labour is paid at the rate of $25 per hour. Manufacturing overhead costs are allocated at a budgeted rate of $16 per direct manufacturing labour-hour. Only Job M1 was completed in May. What is the ending balance in the Work-in-Process Control account?
Company produces pipes for concert-quality organs. Each job is unique. In April 2021, it completed all outstanding orders, and then, in May 2021, it worked on only two jobs, M1 and M2:Rafael Company, May 2021 Job M1 Job M2Direct materials $79,000 $56,000Direct manufacturing labour $277,000 $205,000Direct manufacturing labour is paid at the rate of $25 per hour. Manufacturing overhead costs are allocated at a budgeted rate of $16 per direct manufacturing labour-hour. Only Job M1 was completed in May. What is the ending balance in the Work-in-Process Control account?Correct!
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