Information follows for a company:
1. The beginning-of-the-year Accounts Receivable balance was $25,600.
2. Net sales for the year were $422,700. (Credit sales were $217,600 of the total sales.) The company does not offer cash discounts.
3. Collections on accounts receivable during the year were $137,700.
Prepare summary journal entries to record the items noted above.
Account receivable is a current asset that shows the balance receivable from customers against credit sales. When cash sales are made, cash is received upon sale however when credit sales are made, cash is received at a future date as per the stipulated credit terms.
Answer and Explanation:
Journal entries to record the transactions related to sales:
|Date||Account Titles and Explanation||Debit||Credit|
|Dec 31, 20XX||Cash||$205,100.00|
|Net sales revenue||$422,700.00|
|(to record cash and credit sales for the year)|
|Dec 31, 20XX||Cash||$137,700.00|
|(to record cash received from the customers)|
Closing accounts receivable balance to be reported = beginning balance + credit sales - cash payments
= $25,600 + $217,600 - $137,700 = $105,500
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from Financial Accounting: Homework Help ResourceChapter 3 / Lesson 20