On October 4, 2020, concord company had credit sales transactions of $3300 from merchandise having cost $2600. the entries to record the day’s credit transactions include a credit of $3,300 to Sales.
The term "credit sale" refers to the transfer of ownership of goods and services to a customer where the amount due is paid at a later date. In other words, a credit sale is a purchase resulting from the customer not paying in full at the time of purchase.
For example, if a parts company sells its widgets to a customer on credit and the customer agrees to pay for one month, the parts company will essentially provide offer the customer an interest-free loan equal to the purchase amount. Your credit sales journal entry will debit your accounts receivable with the amount credited by the customer.
Additionally, you will credit the sales tax payable and the revenue account. Selling credits are payments that are not made until days or weeks after product delivery. Short-term credit agreements appear on a company's balance sheet as accounts receivable and are different from immediate cash payments.
There are three main types of sales transactions: cash sales, credit sales, and prepaid sales. The difference between these purchases is simply when the money is received.
1. Cash sales: Cash is collected when a sale is made and the goods or services are delivered to the customer.
2. Sales on credit: The customer has a period after the sale is made to pay the seller.
3. Prepaid Sales: The customer pays the merchant in advance before the sale is made.
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