The entry to journalize the receipt of a time draft for an international sale includes a
A) debit to Sales and a credit to Cash.
B) debit to Cash and a credit to Sales.
C) debit to Sales and a credit to Time Drafts Receivable.
D) debit to Time Drafts Receivable and a credit to Sales.

Question

Quizplus · Accepted Answer

A time draft for an international sale is recognized as a receivable until it is paid. Therefore, the correct entry is to debit Time Drafts Receivable (increasing assets) and credit Sales (recognizing revenue).

The Entry to Journalize the Receipt of a Time Draft