Sale of merchandise



Q11. Sale of merchandise
Entity A sold merchandise at the price of $26,000 on account.
Prepare a journal entry to record this transaction.

A11. Sale of merchandise on account is recorded by posting accounts receivable on the debit side.

Journal entry:

  Debit Credit
Accounts receivable 26,000  
     Sales revenue   26,000

[Note]
1. Increase in accounts receivable (asset): debit
2. Increase in sales revenue (revenue): credit

[Exercise]
Entity B sold merchandise at the price of $25,000 and received $10,000 in cash. The remaining balance will be collected 30 days later.

  Debit Credit
Cash 10,000  
Accounts receivable 15,000  
     Sales revenue   25,000

[Note]
1. Increase in cash (asset): debit
2. Increase in accounts receivable (asset): debit
3. Increase in sales revenue (revenue): credit

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