Quiz 7: Accounting for Sales and Accounts Receivable, and Cash Receipts

Business

Recording sale made on account with a sales discount: A sale made on account would debit the account receivable as there is an increase in the asset with a corresponding credit to the sale account since revenue is credited. The following entries would be passed: Page 40 img Explanations: March 1: The amount in the accounts receivable account would be the total of $700 and $56. The amount of sales tax payable would be img March 3: The amount in the accounts receivable account would be the total of $300 and $24. The amount of sales tax payable would be img March 10: The amount in the cash account would be img March 12: The amount in the accounts receivable account would be the total of $450 and $36. The amount of sales tax payable would be img March 15: The amount in the cash account would be the total of $5,000 and $400. The amount of sales tax payable would be img March 15: The amount in the credit card expense account would be img The amount in the cash account would be img The amount of sales tax payable would be img March 25: The amount in the accounts receivable account would be the total of $300 and $24. The amount of sales tax payable would be img March 26: The amount in the accounts receivable account would be the total of $3,000 and $240. The amount of sales tax payable would be img March 31: The amount in the cash account would be the total of img The amount of sales tax payable would be img March 31: The amount in the credit card expense account would be img The amount in the cash account would be img The amount of sales tax payable would be img March 31: The amount in the credit card expense account would be img The amount in the cash account would be img The amount of sales tax payable would be img The following is the general ledger of accounts receivable: img The following is the subsidiary ledger of accounts receivable: img The following is the general ledger of A: img The following is the subsidiary ledger of accounts receivable: img The following is the general ledger of Mr. M: img The following is the general ledger of Ms. A: img The following is the schedule of the accounts receivable as on March 31, 2013: img

The basic difference between the retail business and the wholesale business is that the • Retail businesses sell the goods directly to the customers • Whereas, wholesale businesses sell goods to retailers who in turn sell goods to the customers.

Sales Returns and Allowances: • It's contra revenue account. • Sales returns and allowances are recorded in this account. Sales Discounts: • It's a contra revenue account. • These discounts are allowed to encourage early payments from debtors. Credit card expense: • The credit card expense account is used to record the fees charged by the credit card company to the seller. Normal balances: All the assets, expenses have a debit balance whereas all the liabilities as well as the revenue accounts have a credit balance. Indicate whether following are debit or credit balances: Sales: Credit balance. Sales returns and allowances: Debit balance. Sales discounts: Debit balance. Credit card expense: Debit balance. Sales tax payable: Credit balance.