X Company is a merchandiser and prepares monthly financial statements. On Septem
ID: 2598473 • Letter: X
Question
X Company is a merchandiser and prepares monthly financial statements. On September 6, its accountant made an entry that resulted in a $57,000 increase in the Cash account and a $57,000 decrease in the Accounts Receivable account. Which of the following transactions is consistent with this entry? X Company
A. paid $57,000 to a supplier from whom the firm had previously bought merchandise on account.
B. received $57,000 from a customer who bought merchandise with cash.
C. received $57,000 from a new investor.
D. received $57,000 from a customer who had previously bought merchandise on account.
E. sold merchandise to customers on account for $57,000.
F. borrowed $57,000 from a bank and signed a note.
Explanation / Answer
When merchandise is sold on account journal entry is
Accounts receivable account......... Dr. 57,000
. to sales account 57,000
When cash realized then journal entry is
Cash account dr......... 57,000 (increase in cash)
to accounts receivable. 57,000 (decrease account rec)
So, option D is correct
Received 57,000 from a customer who had previously bought merchandise on account.
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