Question

• You sell a product for $1,000 in october. You receive $500 in October and $500 in november. How do you recognize the sale?

Answer 1

In October, the month of sale

Cash account...........Debit $500

Accounts receivable account...Debit $500

To Sales revenue account...........Credit $500

Total $1,000 has to be recognized as sales irrespective of the time of payment. the amount to be received to be shown as Accounts receivable under the Current Asset section of Balance sheet

In November,

Cash account...................Debit $500

To Accounts receivable account... Credit $500