Question

Oswego Clay Pipe Company provides services of $45,400 to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. What would Oswego record on April 12? A. Accounts Receivable 44,946 Sales Revenue 44,946 B. Accounts Receivable 45,400 Sales Revenue 44,946 Sales Discounts 454 C. Accounts Receivable 45,400 Sales Revenue 45,400 D. Accounts Receivable 45,400 Sales Discounts 454 Sales Revenue 45,854

Answer 1

Answer:

C. Accounts Receivable 45,400 Sales Revenue 45,400

Explanation:

Trade Receivable $45,400 (debit)

Revenue $45,400 (credit)

Recognise an Asset - Trade Receivable and Revenue

Answer 2

Answer:

C. Accounts Receivable 45,400Dr  Sales Revenue 45,400 Cr

Explanation:

The sales discount is recorded only at the time it is given when the terms 1/15, n/60 are fulfilled. Otherwise it is not recorded. We see that options A, B and D all indicate discounts which are incorrect. So the best choice is Option C.

Oswego Clay Pipe Company

Date           Particulars                            Debit         Credit

April 12       Accounts Receivable 45,400Dr  

                                       Sales Revenue 45,400 Cr

This is the entry required on Apr 12.