Question

Giorgio Italian Market bought $10,500 worth of merchandise from Food Suppliers and signed a 120-day, 6% promissory note for the $10,500. Food Supplier's journal entry to record the sales transaction is:

A) Debit Notes Receivable $10,500; credit Sales $10,500.
B) Debit Notes Receivable $10,500; debit Interest Receivable $210; credit Sales $10,710.
C) Debit Accounts Receivable $10,500; credit Sales $10,500.
D) Debit Notes Receivable $10,710; credit Sales $10,710.
E) Debit Accounts Receivable $10,710; credit Sales $10,710.

Answer 1

A) Debit Notes Receivable $10,500; credit Sales $10,500.

Step-by-step explanation:

The journal entry for recording the sales transaction is shown below:

Notes receivable Dr $10,500

To Sales $10,500

(Being the recording of the sales transaction is recorded)

Here we debited the note receivable as it increased the assets and credited the sales as it also increased the revenue so that the correct posting of this transaction could be done

Hence, the correct option is A.