Question

Kristi’s Pottery sold 200 tiles at $25.00 each to a charge customer, terms 1/10, n/30. Which entry is required to record this transaction?

Answer 1

Answer: The following entry is required to enter this transaction

Accounts Receivable A/c Dr              $5,000

                To Sales                                                  $5,000

Since Kristi's sold the tiles on charge, it means that it was a credit sale.

On the day of the sale, we will credit the sales account with the total value of the sale i.e $200 * 25 = 5000$. Since it's a credit sale we'll debit the Accounts Receivable account with $5000.

The terms of the sale are 1/10, n/30. This means that the customer can get a 10% discount if he pays within 1 day of the sale, else he has 30 days to pay the entire amount.

Since we don't know if the customer paid within a day or not, we record the  transaction above in order to account for the credit sale.