Student scholarships for which no service was required amounted to $1,500. What is the correct journal entry?

Question

Quizplus · Accepted Answer

Since scholarships for which no service was required amounted to $1,500, it should be recorded as a tuition discount in the accounting system. Therefore, the correct journal entry would be to debit Tuition discount account (a contra-revenue account) with $1,500 and to credit Accounts Receivable account with $1,500. Option A, Scholarship Expense account is not appropriate as the scholarship was offered without requiring any service in return. Option B, Loan to student is not appropriate as this would imply that the student has taken a loan instead of receiving a scholarship. Option D, None of the above is not correct as Option C is the correct answer.

Student Scholarships for Which No Service Was Required Amounted to $1,500