Looking at the cash receipts journal for Karns Wholesale on May 10 (Illustration 7-9), why is the credit to Accounts Receivable $10,600 while the debit to Cash is only $10,388?
Explanation
When a customer pays within the discount period, they pay less than the full invoice amount. The company records the full amount of the receivable being cleared, the actual cash received, and the difference is debited to the Sales Discounts account.
Other questions
According to the principles of an efficient and effective accounting information system, what does 'cost-effectiveness' imply?
Which of the following best describes an Enterprise Resource Planning (ERP) system?
What is the primary function of a subsidiary ledger?
In the relationship between a general ledger and a subsidiary ledger, what is a 'control account'?
Based on Illustration 7-3 and 7-4 for Pujols Company, what is the balance in the Accounts Receivable control account at the end of January?
Which of the following transactions would be recorded in a sales journal?
What is a primary advantage of using a special journal like the sales journal?
In the sales journal for Karns Wholesale Supply (Illustration 7-6), the dual-column format (Accts. Receivable Dr./Sales Revenue Cr. and Cost of Goods Sold Dr./Inventory Cr.) is necessary because the company uses which inventory system?
According to Illustration 7-6, what is the total amount that will be debited to the Accounts Receivable control account at the end of May?
What does a check mark (✓) in the reference (Ref.) column of a special journal typically indicate?
Which of the following transactions would be recorded in the cash receipts journal?
In the cash receipts journal for Karns Wholesale Supply (Illustration 7-9), what is the purpose of the 'Other Accounts Cr.' column?
What is the primary purpose of a purchases journal?
On May 31, what total amount is posted from the purchases journal (Illustration 7-13) to the general ledger?
Which of the following would be recorded in a cash payments journal?
In the cash payments journal for Karns Wholesale (Illustration 7-16), which column total is NOT posted to the general ledger at the end of the month?
If Karns Wholesale Supply uses the four special journals plus a general journal, which of the following transactions would be recorded in the general journal?
Based on Illustration 7-18, when recording the return of merchandise for credit from Fabor and Son, what does the posting reference '201/✓' signify?
A company with revenues of $3 million and 15 employees would most likely use what type of accounting software?