Maxie's Game World sold games to a customer on credit for $2,600, terms 1/10, n/30 and the cost of the games was $1,700. When recording the sales transaction in its sales journal, Maxie's would enter:
A) $1,700 in the Accounts Receivable Dr./Sales Cr. column and $2,600 in the Cost of Goods Sold Dr./Inventory Cr. column.
B) $2,600 in the Accounts Receivable Dr./Sales Cr. column and $1,700 in the Cost of Goods Sold Dr./Inventory Cr. column.
C) $2,600 in the Accounts Receivable Dr./Sales Cr. column and $2,600 in the Cash Cr. column.
D) $2,600 in the Accounts Receivable Dr./Sales Cr. column and $1,700 in the Accounts Payable Dr./Purchases Cr. column.
E) $1,700 in the Accounts Receivable Dr./Sales Cr. column and $2,600 in the Other Accounts Dr. column.

Question

Quizplus · Accepted Answer

Maxie's Game World would enter $2,600 in the Accounts Receivable Dr./Sales Cr. column, as this is the total amount of the sale on credit. They would enter $1,700 in the Cost of Goods Sold Dr./Inventory Cr. column, as this is the cost of the games sold. The terms of 1/10, n/30 do not affect the recording of the sales transaction itself, but would come into play if the customer decides to take advantage of the discount for paying within 10 days.

Maxie's Game World Sold Games to a Customer on Credit