Question

20. AG Inc, made a $25,000 sale on account with the following terms: 2/10, 1/30. If the company uses the net method to record sales made on credit, what is/are the debit(s) in the journal entry to record the sale? a. Debit Accounts Receivable for $24,500. b. Debit Accounts Receivable for $24,500 and Sales Discounts for $500. c. Debit Accounts Receivable for $25,000. d. Debit Accounts Receivable for $25.000 and Sales Discounts for $500.

Answer 1

Answers

• Answer #20
  >Complete entry to record sale:
  [Debit] Accounts receivables $ 24,500 [$ 25000 – 2%]
  [Credit] Sales Revenue.
  >Correct Answer = Option ‘A’ Debit Accounts receivables for $ 24500
  >Sales discount is not used under ‘Net method’
• Answer #21
  >Balance in the Allowance account adjustment = Estimated uncollectible amount
  = $ 1.27 million account receivables x 2%
  = $ 25,400
  >Correct Answer = Option ‘C’ $ 25400