A company sells merchandise to a customer on credit. The journal entry to record this transaction would include a debit to the Accounts account.
Question
A company sells merchandise to a customer on credit. The journal entry to record this transaction would include a debit to the Accounts account.
Solution
The journal entry to record this transaction would include a debit to the Accounts Receivable account. Here's the step-by-step process:
-
Identify the accounts involved: In this case, the accounts involved are Accounts Receivable (the account that tracks money owed to the company) and Sales Revenue (the account that tracks income from selling goods).
-
Determine the amount of the transaction: This is the price of the merchandise sold to the customer on credit.
-
Apply the rules of debit and credit: In the double-entry bookkeeping system, every transaction affects at least two accounts. One account is debited (increased) and another account is credited (decreased). In this case, Accounts Receivable is debited because the company is expecting to receive money, increasing the value of this asset account. Sales Revenue is credited because the company has earned revenue, increasing this income account.
-
Record the journal entry: The journal entry would look something like this:
Debit: Accounts Receivable (for the amount of the sale)
Credit: Sales Revenue (for the same amount)
This journal entry reflects that the company has sold merchandise on credit, increasing both the amount of money owed to the company (Accounts Receivable) and the company's earned revenue (Sales Revenue).
Similar Questions
Assuming a periodic inventory system is used, the entry to record a purchase of merchandise on credit includes:Multiple Choicea debit to Purchases and a credit to Accounts Payable.a debit to Accounts Payable and a credit to Purchases.a debit to Purchases and a credit to Accounts Receivable.a credit to Purchases and a credit to Accounts Payable.
The journal entry to record the purchase of materials on account is to:Multiple choice question.debit Accounts Payable and credit Raw Materials Inventorydebit Accounts Payable and credit Production Materialsdebit Production Materials and credit Accounts Payabledebit Raw Materials Inventory and credit Accounts Payable
The entry to record a purchase allowance granted on a credit memo includes a debit to which account in the general ledger?Multiple ChoiceCashAccounts PayablePurchases Returns and AllowancesPurchases Discounts
In the perpetual inventory system, what is the journal entry to record the payment of accounts payable for inventory purchases?Question 9Answera.Debit Cash, Credit Inventoryb.Debit Cash, Credit Accounts Payablec.Debit Inventory, Credit Cashd.Debit Accounts Payable, Credit Cash
A credit purchase of a business expense item should be recorded with a debit to an expense account and a credit to Accounts Payable. True False
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.