On January 1, 2015 Outback Subaru Limited, a Subaru dealership in Alice Springs, sold 2 cars to the town for $50,000 total. Outback had paid $37,000 to purchase the cars. The town was granted credit terms and permitted to pay in 30 days.

What would be the impact on January 1, 2015, the date of the sale?

The following journal entries should be made to register the sale:

January 1, 2015: 2 cars are sold

Dr Cost of Goods Sold 37,000

    Cr Merchandise Inventory 37,000

Dr Accounts Receivable 50,000

    Cr Sales Revenue 50,000

On January 30, 2015 Outback Subaru Limited received payment in full from the town for the cars. What would be the impact of this transaction on this date?

The following journal entry should be made to register the payment:

January 30, 2015: the local government paid the cars

Dr Cash 50,000

    Cr Accounts Receivable 50,000

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