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16 December, 06:36

During the year, Unger Inc. recorded sales revenue of $400,000. The balance in accounts receivable decreased by $4,000. The amount of cash received from customers can be derived by preparing a journal entry that includes: (Select all that apply.)

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  1. 16 December, 10:36
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    The sales revenue was of $400,000 which means that Unger INC were to receive 400,000 as cash for their sales or record part of it as accounts receivable. At the end of the year the balance of accounts receivable decreased by 4,000, which means that they got 400,000 in cash for their sales during the year because accounts receivable for the year didn't increase. Also because the accounts receivable decreased by 4,000 it means that they received 4,000 cash that they were previously which didn't have to do anything with the current sales revenue of 400,000.

    So we can make journal entries of cash being debited by 404,000 (400,000+4,000) and sales revenue being credited by 400,000 because that is the sales made during the year, and crediting accounts receivable by 4,000 because it is an asset which is decreasing by 4,000 so we will credit it by 4,000.

    Debit Credit

    Cash 404,000

    Sales revenue 400,000

    Accounts receivable 4,000
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