Payment for the merchandise sold on credit fro $100 subject to 2/10 n/30 was rec
ID: 2443426 • Letter: P
Question
Payment for the merchandise sold on credit fro $100 subject to 2/10 n/30 was received within the discount period- $98 was received. This was recorded with a debit to Sales Discounts for $2, a debit to cash for $98, and a credit to Accounts Receivable 100 but no mention was made of the subsidiary ledger account. This error would cause:A) the net income for the period to be overstated
B) the net income for the period to be understated
C) the assets to be overstated
D) the control account not to agree with the subsidiary ledger
Explanation / Answer
Payment for the merchandise sold on credit fro $100 subject to 2/10 n/30 was received within the discount period- $98 was received. This was recorded with a debit to Sales Discounts for $2, a debit to cash for $98, and a credit to Accounts Receivable 100 but no mention was made of the subsidiary ledger account. This error would cause: D) the control account not to agree with the subsidiary ledger Special or supporting ledger (such as cost ledger, purchases ledger, sales ledger) that provides more detailed information about individual accounts than a general ledger. Used by firms with larger number of customers (or creditors), these ledgers divide masses of financial data into more manageable parts. Total of all individual accounts in a subsidiary ledger equals the balance of the corresponding summary account (called control account) in the general ledger.
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