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25 April, 22:48

Able sells and delivers a piece of equipment to Smythe for $2,000 on August 1 and the equipment cost $1,300. The sale is a credit sale. How is this transaction accounted for under a periodic system of inventory?

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  1. 26 April, 01:11
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    Debit entry - Accounts Receivables - $2,000

    Credit entry - Sales - $2000

    Explanation:

    Due to the fact that it is a credit sale, it means that the cash would be obtained at a future date in time. Hence, until then, Mr Smythe is indebted to Able as he is a debtor. Once he pays what he owes to Able and the cash has been received, Accounts receivables would be credited with $2000 and cash would be debited with $2000.
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Home » Business » Able sells and delivers a piece of equipment to Smythe for $2,000 on August 1 and the equipment cost $1,300. The sale is a credit sale. How is this transaction accounted for under a periodic system of inventory?
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