Asked by Ghost Nappa on Jul 21, 2024
Verified
Sara's Jewelry sold 40 necklaces for $35 each to a credit customer. The invoice included a 7% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to record the original sale would include: (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
A) a debit to Accounts Receivable for $1,498.
B) a debit to Accounts Receivable for $1,400.
C) a debit to Sales for $1,498.
D) a debit to Sales for $1,400.
Credit Customer
A customer who purchases goods or services on credit, agreeing to pay the seller at a later date.
Accounts Receivable
The money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.
- Analyze the effect that sales returns and discounts have on net sales and net income metrics.
- Analyze transactions involving sales tax and determine the correct journal entries.
Verified Answer
DD
david delaneyJul 26, 2024
Final Answer :
A
Explanation :
CThe original sale of 40 necklaces at $35 each amounts to $1,400. With a 7% sales tax, the total comes to $1,400 * 1.07 = $1,498. Therefore, the entry to record the sale would include a debit to Accounts Receivable for $1,498 to reflect the amount the customer owes (including sales tax) and a debit to Sales for $1,400 to record the revenue from the sale before tax.
Learning Objectives
- Analyze the effect that sales returns and discounts have on net sales and net income metrics.
- Analyze transactions involving sales tax and determine the correct journal entries.