During March, Seconds Best Company had cash sales of $10,000 and sales on account of $60,000.In April, payments on account totaled $50,000.
-Use the information above to answer the following question.The journal entry prepared by Seconds Best Company to record customer payments on account during April would include a debit to:
A) Cash and a credit to Unearned Sales Revenue for $50,000.
B) Cash and a credit to Sales Revenue for $50,000.
C) Cash and a credit to Accounts Receivable for $50,000.
D) Cash and a credit to Accounts Payable for $50,000.

Question

Quizplus · Accepted Answer

The payments received on account are reducing the amount owed by customers, which is represented by the Accounts Receivable account. Therefore, when the payment is received, there should be a debit to Cash (as money is received) and a credit to the Accounts Receivable account (as the amount owed by customers has decreased). Option A is incorrect because Unearned Sales Revenue is not affected by customer payments on account. Option B is incorrect because Sales Revenue is affected by cash sales and not by customer payments on account. Option D is incorrect because Accounts Payable represents the amount owed by the company to its suppliers and not by customers to the company.

During March, Seconds Best Company Had Cash Sales of $10,000