Thank you for visiting Marvin s Motorcycles received 125 cash from Stewart s Rides for payment on his account Stewart s Rides took a 25 sales discount for paying. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Final answer:
The correct journal entry debits Cash for $100, debits Sales Discounts for $25, and credits Accounts Receivable/Stewart's Rides for $125, reflecting the payment with an early payment discount.
Explanation:
The correct journal entry for Marvin's Motorcycles to record the payment from Stewart's Rides, who took a $25 sales discount for paying early, is:
- debit Cash, $100
- debit Sales Discounts, $25
- credit Accounts Receivable/Stewart's Rides, $125
This entry reflects the receipt of cash reduced by the sales discount, and the reduction of the accounts receivable by the total amount owed, which is the sum of cash received and the discount taken.
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