Julian Company sold goods for a total selling price of $5,000. The sale was made on...
Julian Company sold goods for a total selling price of $5,000. The sale was made on account. The terms of the sale are 4/20, n/60. When Julian recorded this credit sale, Julian debited Accounts Receivable for $5,000. – Assume that Julian collects the cash 15 days after the sale. Which ONE of the following is included in the journal entry Julian Company must make to record the receipt of cash after 15 days? Note: We are NOT recording the original sale; instead, we are recording the subsequent collection of cash on account.
DEBIT to Cash for $5,000
CREDIT to Cash for $5,000
DEBIT to Cash for $4,800
CREDIT to Cash for $4,800
CREDIT to Accounts Receivable for $4,800
DEBIT to Accounts Receivable for $5,000
DEBIT to Accounts Receivable for $4,800Homework Answers
4/20 means if cash is received within 20 days, 4% discount will be given. Cash is received within 15 days and discount of 4% will be given.
Sales discount = $5,000 X 4% = $200
When cash is received the journal entry would be:
Cash (Debit) $4,800
Sales discount (Debit) $200
Accounts receivable (Credit) $5,000
DEBIT to Cash for $4,800
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