Black Systems sold and delivered modems to White Computers for $330,000 to be paid by White in three equal installments over the next three months. The journal entry made by Black Systems to record this transaction will include:

Question

Quizplus · Accepted Answer

Black Systems sold modems to White Computers on credit, which means Black Systems will have an account receivable for this transaction. The amount of the account receivable will be equal to the sale price of $330,000. Therefore, the journal entry should include a debit to Accounts Receivable for $330,000. Option A is incorrect because Sales Revenue should be credited, not debited, since the company has not received the cash yet. Option C is incorrect because Black Systems will not receive the payment in equal installments but in three separate payments of $110,000. Option D is incorrect because Black Systems did not make any payment yet.

Black Systems Sold and Delivered Modems to White Computers for $330,000