Final answer:
When Gaur delivers the equipment on January 1, 2021, the correct journal entry includes a Debit to Accounts Receivable and a Credit to Sales Revenue. Payments received at a future date do not affect the initial journal entry for the delivery of the equipment. Therefore correct option is B
Step-by-step explanation:
Gaur's journal entry when delivering the Jensen equipment would involve recognizing revenue and creating an account receivable since payment is not received at the time of the delivery. The correct journal entry on January 1, 2021, would be:
- Debit Accounts Receivable (to record the amount due from the customer)
- Credit Sales Revenue (to recognize the revenue from the sale of the equipment)
Thus, the correct answer is a Credit to sales revenue. Since the payment is not being received until June 30, 2022, 'Debit to cash' is not appropriate at the time of delivery. A 'Debit to discount on notes receivable' would only be relevant if this transaction involved a discounted note, which is not indicated in the question. 'Credit to notes receivable' could be used if this were a promissory note arrangement, but the typical term would be 'Accounts Receivable' for a standard credit sale.