In the case of a garage which deals with the public, which of the following double-entries is the correct way to record the lodgement of hire purchase commission received as a result of selling cars to customers ………..?
Select ONE answer:
- Account to Debit Bank / Account to Credit Sales
- Account to Debit Sales / Account to Credit Bank
- Account to Debit Bank / Account to Credit Commission
- None of the above
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple choice question is suitable for Accounting KS5 classes.
The answer is 3 – Only the sale of “goods” should be recorded in the sales account as a credit. There should be a separate account for hire purchase commission.
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