Central Company sold goods for $5,000 to Western Company on March 12 on credit. Terms of the sale were 2/10, n/30. At the time of the sale, Central recorded the transaction by debiting Trade Receivables for $5,000 and crediting Sales Revenue for $5,000. Western paid the balance due on April 9. To record the April 9 transaction, Central would debit which of the following?

Question

Quizplus · Accepted Answer

When Western Company paid the balance due on April 9, Central Company would debit Cash for $5,000 to record the receipt of the payment. The discount taken by Western Company, if any, would be recorded separately by debiting Sales Discounts and crediting Cash. However, since the question does not mention any discount taken by Western Company, we can assume that the full balance of $5,000 was paid on April 9. Therefore, the correct answer is option C.

Central Company Sold Goods for $5,000 to Western Company on March