Paoli Pizza bought $5,000 worth of merchandise from TechCom and signed a 90-day,10% promissory note for the $5,000.TechCom's journal entry to record the sales portion of the transaction is:

Question

Quizplus · Accepted Answer

The journal entry to record the sale portion of the transaction is:
Debit: Accounts Receivable for $5,500
Credit: Sales for $5,000
Credit: Interest Revenue for $500 (10% of $5,000) 
Option B is the correct answer as it debits Accounts Receivable for $5,500 and credits Sales for $5,000 as it is the sale portion of the transaction. The other options did not record the sale correctly.

Paoli Pizza Bought $5,000 Worth of Merchandise from TechCom and Signed