Yu Limited Records a VAT Inclusive Figure for Sales of £105,000

question 12

Multiple Choice

Yu Limited records a VAT inclusive figure for sales of £105,000 for the month of August. All sales are made on credit and VAT is charged at the rate of 20% on the net sales value of each sale. What is the correct double entry to record these sales?

• A) Debit trade receivables £126,000, Credit sales £105,000, Credit VAT £21,000.
• B) Debit cash £126,000, Credit sales £105,000, Credit VAT £21,000.
• C) Debit trade receivables £105,000, Credit sales £87,500, Credit VAT £17,500.
• D) Debit cash £105,000, Credit sales £87,500, Credit VAT £17,500.

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Definitions:

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Deoxyribonucleic acid, a molecule that carries the genetic instructions used in the growth, development, functioning, and reproduction of all living organisms and many viruses.