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2 September, 09:29

A company sells goods to a customer who will pay the full amount in 30 days. How should the company record the sale

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  1. 2 September, 11:42
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    Credit sales

    Debit receivables

    Explanation:

    This is a sales on account transaction which affect the sales and receivables account.

    When this transaction occurs, the company has definitely made a sale which will lead to an inflow of cash in 30 days time, even though the income is recognized immediately according to the accrual method of accounting

    To record this, the sales account is credited with the value of the goods sold and the account receivable is debited for with the same amount.

    The receivable is a record of payment being owed to the company by its customers.
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