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

Question

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 O received $66,000 from a customer who bought merchandise with cash. O sold merchandise to customers on account for 66,000 borrowed $66,000 from a bank and signed a note. O paid $66,000 to a supplier from whom the firm had previously bought merchandise on account. received $66,000 from a new investor received$

Explanation / Answer

X Company received the cash, therefore there is an increase in cash account. The decrease in Accounts receivable happens when the accounts receivable has made the payment. Hence the correct transaction consistent with this entry is -

Received $66,000 from a customer who had previously bought merchandise on account.

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