During its first year of business, Mega, Inc. earned revenues of ...

[leo leo]

During its first year of business, Mega, Inc. earned revenues of 400,000, of which it collected only 310,000 in cash. Which of the following statements is CORRECT?
 
  A) The income statement will show Cash collected from customers of 310,000.
  B) The balance sheet will show Accounts receivable of 310,000.
  C) The income statement will show Revenues of 310,000.
  D) The income statement will show Revenues of 400,000.

Question 2

Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for 20,000 . Pierce prepaid the 500 shipping charge. Which of the following entries does Pierce make to record this sale?
 a. Accounts ReceivableStanton, debit 20,000 Sales, credit 20,000
  b. Accounts ReceivableStanton, debit 19,600 Sales, credit 19,600, and Accounts ReceivableStanton, debit 500 Cash, credit 500
  c. Accounts ReceivableStanton, debit 20,100 Sales, credit 20,100
  d. Accounts ReceivableStanton, debit 20,000 Sales, credit 20,000, and
  Delivery Expense, debit 500; Cash, credit 500

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Answer to Question 1

D

Answer to Question 2

b

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