Burgundy Corp. sold jazz flutes to a customer for $3,000 on credit on January 1. The customer paid Burgundy Corp. the amount due on February 1. Under the accrual basis of accounting, how should Burgundy Corp. record the January 1 transaction? Question 16 options: Debit to Cash and a Credit to Sales Revenue Debit to Sales Revenue and a credit to Accounts Payable Debit to Accounts Receivable and a credit to Sales Revenue Debit to Accounts Payable and a credit to Sales Revenue
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Burgundy Corp. sold jazz flutes to a customer for $3,000 on credit on January 1. The customer paid Burgundy Corp. the amount due on February 1.
Under the accrual basis of accounting, how should Burgundy Corp. record the January 1 transaction?
Question 16 options:
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Debit to Cash and a Credit to Sales Revenue |
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Debit to Sales Revenue and a credit to Accounts Payable |
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Debit to Accounts Receivable and a credit to Sales Revenue |
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Debit to Accounts Payable and a credit to Sales Revenue |
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