Question

When recording the transaction of selling merchandise on account with terms n/30 for $17,300 (costing $12,600), what would be the entry in the "Amount" box for the Accounts Receivable?

a) $17,300
b) $12,600
c) $17,300 - $12,600 = $4,700
d) No entry required

Answer 1

The 'Amount' entry in the Accounts Receivable for selling merchandise on account for $17,300 should be $17,300 itself, which is the sales price and not the cost of goods sold.

Step-by-step explanation:

When recording the transaction of selling merchandise on account with terms n/30 for $17,300, the appropriate entry in the Accounts Receivable 'Amount' box would be $17,300. This amount represents the sales price, not the cost of the goods sold.

The cost of the goods, which is $12,600, would be recognized in the Cost of Goods Sold (COGS) account, affecting inventory and expenses rather than Accounts Receivable.