James Ltd sold goods to Cameron Ltd on credit for $2 500. Ignoring GST and Cost of Sales, the correct accounting entry to record this transaction in James Ltd's books is:

Question

Quizplus · Accepted Answer

The correct accounting entry to record this transaction in James Ltd's books is to debit accounts receivable and credit sales. This is because Cameron Ltd owes James Ltd money for the goods sold, which is recorded as accounts receivable, and James Ltd has made a sale, which is recorded as sales. Option A is the correct choice as it reflects this transaction appropriately. Option B is incorrect as it records the transaction with the reverse debit/credit, Option C is incorrect as there is no bank involved in the transaction, and Option D is incorrect as it records the transaction as a purchase rather than a sale.

James Ltd Sold Goods to Cameron Ltd on Credit for $2