S pt X Company is a merchandiser and prepares monthly financial statements. On S

Question

S pt X Company is a merchandiser and prepares monthly financial statements. On September 6, its accountant made an entry that resulted in a $66,000 increase in the Cash account and a $66,000 decrease in the Accounts Receivable account. Which of the following transactions is consistent with this entry? X Company 7.AO sold merchandise to customers on account for $66,000. BO received $66,000 from a new investor CO merchandise on account. DO received EO received $66,000 from a customer who had previously bought merchandise on FO borrowed S66,000 from a bank and signed a note. paid $66,000 to a supplier from whom the firm had previously bought $66.000 from a customer who bought merchandise with cash. account.

Explanation / Answer

E. Received $66000 from a customer who had previosly bought merchandise on account The entry is to record sales on account is; Account receivable       xxx               Sales revenue               xxx and the entry is to record collection from accounts receivable is; Cash             xxx       Account receivable   xxx in the above case the cash will increase and account receivable will increase

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