Question

Oswego Clay Pipe Company provides services of $48,900 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 12? Accounts Receivable Sales Revenue Accounts Receivable Sales Revenue Sales Discounts Accounts Receivable Sales Revenue Accounts Receivable Sales Discounts Sales Revenue 48,411 48,411 48,900 |48,411 489 48,900 48,900 48,900 489 49,389 Multiple Choice Option A Option B Option C O Option D

Answer 1

Answer 1- Option C

Explanation- 1-After providing the services company’s revenue gets increased . So, Revenue will be credited with $ 48,900. Revenue is earning so to increase that, we credit it.

2- If a company provides services on credit, Accounts Receivable will get increased with the amount $ 48,900.Accounts Receivable is an asset so to increase an asset, we debit it.

Answer 2- Option A

Explanation- 1- Bad Debts is an Expense account and to increase it, we will debit it with the amount $ 23,500. Bad debts are those amounts which are not going to receive.

2- Allowance for uncollectible accounts is going to be credit with the amount $ 23,500 because it is a contra asset account.

Working Note- Accounts Receivable balance before the adjustments is $ 310,000 from which $ 50,000 is past due.

As per question, 310,000 - 50,000 = 260,000 ( amount of current year)

So, 260,000 * 5 / 100 = $13,000

Similarly, $ 50,000 (past due)

50,000 * 21 / 100 = $10,500

Total Amount = 13,000 + 10,500 = $23,500

Answer 3- Option C

​​​​​​​Explanation - 1- Cash is an asset account so when it increases, it will be debited. Here, the company is receiving cash ($ 10,165).

2- Note Receivable will get credited with the amount $ 9,500 as it is increasing.

3- Interest is being recieved so it will get credited with the amount $ 665 because when we get Interest or commission, we credit them.

Working Note- Interest = 9,500 * 14 * 6 / 100 * 12

= $ 665

Answer 4- Option C

​​​​​​​Explanation- 1- Cash is increasing so we will debit it with the amount $ 46,000.

2- Accounts Receivable is decreaseing so we will Credit it with the same amount. As accounts receivable is an asset account to decrease it, it should be credited.

Note- Here, the company which is paying will not get 1% discount because it is paying after 15 days.