Question

On Dec 25th, 2019, ABC sold $500,000 goods to the XYZ Company term (2/10/N30). Based on this, revenues to be recognized in 2019 is:

Select one:

a. $10,000

b. $0

c. $490,000

d. $500,000

Answer 1

Right anser is Option d. $500,000

Explanations:

Journal Entry will be

Accounts Receivable - ABC Company ..........Debit $500,000

Sales Revenue.......................................................................Credit $500,000

So, the Revenue will be $500,000

Term 2/10, N/30 means If XYZ company will pay the amount within 10 days they will receive Discount of 2% on sales, and if pay after 10 days there will be no discount.

this discount will not affect the Revenue only Accounts Receivable will affect and the Revenue will remain $500,000,

So the Right answer will be $500,000