Question

Sue’s Jewelry sold 20 necklaces for $25 each to a credit customer. The invoice included a 6% sales tax and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the original sale would include a debit to A. Accounts Receivable for $530. B. Accounts Receivable for $500. C. Sales for $530. D. Sales for $500.

Answer 1

The correct entry to record the original sale would be a debit to Accounts Receivable for $530, which includes the sale amount of $500 and the sales tax of $30.

Step-by-step explanation:

To calculate the original sale entry for Sue's Jewelry, we first determine the total sales amount before any returns. Each necklace costs $25, and 20 were sold, so the calculation is 20 necklaces × $25 each = $500. Next, we calculate the 6% sales tax on this amount: $500 × 0.06 (6%) = $30. Therefore, the total amount including sales tax is $500 (initial sales) + $30 (sales tax) = $530.

The correct journal entry to record the original sale on credit would include a debit to Accounts Receivable for the total amount including sales tax since Accounts Receivable needs to show the full amount that the customer owes, which includes the sales tax. Therefore, the answer is A. Accounts Receivable for $530. The sale itself is recorded separately in the Sales account and would not include the sales tax.

Answer 2

The right answer for the question that is being asked and shown above is that: "B. debit to Sales Returns and Allowances for $125.00. " Five necklaceswere returned prior to payment. The entry to record the return would include a B. debit to Sales Returns and Allowances for $125.00.