Question

RUHC Corporation ships a large order of chemicals to a customer near of the end of March 2025 . The sale price on the order is $15,000. The customer has 60 days to pay for the order. Cash is collected from the customer in early May of 2026. Record the journal entries for the sale of the goods and the cash collection.

Answer 1

The journal entry for the sale of goods is a debit to Accounts Receivable and a credit to Sales Revenue, while cash collection is recorded as a debit to Cash and a credit to Accounts Receivable.

Step-by-step explanation:

Recording Journal Entries for Sales and Cash Collection

The subject question involves recognizing revenue and recording cash collection for the sale of goods in accounting. When RUHC Corporation makes the sale of $15,000 worth of chemicals at the end of March 2025, the journal entry to record the sales transaction would involve a debit to Accounts Receivable and a credit to Sales Revenue. This reflects that the company has made a sale on account (not yet received cash) and has earned revenue. The journal entry would look like this:

• Debit Accounts Receivable: $15,000
• Credit Sales Revenue: $15,000

When the company subsequently collects cash from the customer in early May 2026, the cash receipt is recorded by debiting Cash and crediting Accounts Receivable to indicate that cash has been received and that the receivable has been settled. The entry would be:

• Debit Cash: $15,000
• Credit Accounts Receivable: $15,000

This sequence of journal entries ensures that the company's financial statements accurately reflect the earning of revenue at the time of the sale and the collection of cash when it actually occurs.