Originally Posted by jahubb
Please tell me if I'm answering the following question correct.
On May 1, EZ Plumbing buys materials with a list price of $550. At the time of the purchase, EZ gives Halpin a check for $225 and asks Halpin to put the remainder of the purchase on its account, which already has a balance of $475. On July 1, EZ goes out of business without making any additional purchases or payments. Halpin learns it will be unable to collect the outstanding receivable balance. Halpin uses the direct write off method to account for bad debts.
1.) The amount Halpin Plumbing supplies should record as sales revenue for the May 1 transaction is. a. 55 b.495 c.540 d. 550. I answered $550 is this correct?
2.)What journal entry will Halpin make to recort the May 1 sale
a. Debit Sales Revenue, Credit Accounts Receivable
b. Credit Sales Revenue, Debit Accounts REceivable
c. Debit Sales Revenue, Debit Cash, Credit Accounts Receivable
d. Credit Sales Revenue, Debit Cash, Debit Accounts Receivable
I answered b, but if they paid $225 cash should it be c ?
3.) What balance will Halpin's accounts receivable subsidiary ledger show for EZ plumbing immediately after the May 1 sale?
