[se7en.14]

Hi all,

Hopefully someone can help me with this simple problem…why sales is debited in the t-accounts:

Zeta co. reported sales revenue of $4,600k in its I/S for year ended 12/31/x2. Additional info:

12/31/X1 12/31/x2

A/R $1000k $1,3000

Allow for uncol. accts. -$60k $110k

Zeta wrote off uncol. accts totalling $20k during year 2. Under cash basis of acct, Zeta would have reported year 2 sales of :

a)$4,900k

b)$4,350k

c)$4,300k

d)$4,280k

SOLUTION:

T-accounts:

A/R:

_____________________________________

12/31/X1 $1,000k Dr |

sales $4,600k Dr | $20k Cr Write offs

| ? Collections

_________________ |____________________

12/31/X2 $1,300 Dr |

? = $4,280k

Why is sales Debited?

Thanks!!

.

[stoleway]

I dont think sales was debited….it's rather AR that was debited.

Check your t_accounts again.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[Mamabear]

I'm not sure what you have going on up above. The numbers aren't adding up to me and sales is definitely not debited. The JE for sales revenue is

DR Accounts Receivable

CR Sales

The JE for write offs is

DR Allowance for Bad Debt

CR Accounts Receivable

Cash Collected JE would be

DR Cash

CR Accounts Receivable

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[nicole2035]

You need to learn how to use t-account, they will really help you. The explanation you have is correct but i think you're confused why Sales revenue has a debit. It's not a debit to actual sales revenue, it's listed under the AR T account meaning the sales revenue created a debit to ar because the entry is DR. AR CR: Sales revenue

In accounting all our entries have to balance and hit another account. T accounts give u a quick way to see the other side of an entry without having to write out a journal entry

I'd go here:

https://www.accountingcoach.com/debits-and-credits/explanation/2

[se7en.14]

thanks all~

that is answer from a book. not my solution as i was confused on it. and since these reply boxes have no formatting, it looks a bit more confusing. but i understand it now.

=D

.

[Author]

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