Question

Centre College, a private liberal arts college in Central Kentucky, charged (billed) tuition and fees of $50,000 based on the registration of students; Centre provided scholarships of $12,000 to the registered students. The entry to bill the tuition and fees and scholarships would include a: A. Debit to Tuition and Fees, $50,000. B. Debit to Tuition Discounts and Allowances, $12,000. C. Credit to Tuition and Fees, $38,000. D. Credit to Tuition Discounts and Allowances, $14,000.

Answer 1

Answer: B. Debit to Tuition Discounts and Allowances, $12,000.

Explanation:

A scholarship is considered a discount so should be recorded as one. When recording a discount, it is debited to its own account which in this case will be the Tuition Discounts and Allowances account.

The full entries are,

DR Cash (50,000 - 12,000) $38,000

DR Tuition Discounts and Allowances $12,000

CR Tuition and Fees $50,000