What is the correct journal entry to record a credit sale to a customer?

Introduction / Context:
Recording sales correctly is critical for both revenue reporting and tracking amounts due from customers. A credit sale occurs when goods or services are provided now and payment will be received later. The journal entry must recognise revenue immediately and create a receivable asset. Interview questions on this topic test whether candidates understand the difference between cash sales, credit sales and later adjustments such as returns or bad debts.

Given Data / Assumptions:

• The transaction is a normal credit sale of goods or services to a customer.
• No sales tax, returns or discounts are mentioned in the question.
• The business uses double entry accounting with standard account names.
• Accounts Receivable is used to track amounts due from customers.

Concept / Approach:
When a credit sale takes place, the business earns revenue and simultaneously gains a legal claim against the customer, which is an asset. In accounting terms, assets increase with debits and revenues increase with credits. Therefore, the correct entry must debit Accounts Receivable and credit Sales Revenue for the amount of the sale. Options that debit Sales Revenue or Accounts Payable or Cash do not correctly represent the nature of a credit sale, which does not generate immediate cash nor a liability to suppliers.

Step-by-Step Solution:
Step 1: Identify the two main effects of a credit sale: revenue earned and receivable created. Step 2: Recall that Accounts Receivable is an asset, which increases by a debit. Step 3: Recall that Sales Revenue is an income account, which increases by a credit. Step 4: Form the journal entry by debiting Accounts Receivable and crediting Sales Revenue. Step 5: Compare the formed entry with the given options and select the exact matching statement.

Verification / Alternative check:
To verify, consider what happens on the financial statements. Debiting Accounts Receivable increases total assets, reflecting that the customer now owes money. Crediting Sales Revenue increases total income, which will eventually raise profit and equity. When the customer later pays, a second entry is recorded, debit Cash and credit Accounts Receivable, converting the receivable into cash without affecting revenue again. This sequence confirms that the first entry for the credit sale must be debit Accounts Receivable and credit Sales Revenue, not any of the other combinations presented in the options.

Why Other Options Are Wrong:
Option B is wrong because debiting Sales Revenue would reduce income instead of increasing it, which contradicts the nature of a sale. Option C describes a cash sale, not a credit sale, because it uses Cash instead of Accounts Receivable. Option D relates to sales returns, which are recorded when a customer sends goods back, not when a sale is initially made. Option E is incorrect because Accounts Payable represents amounts owed to suppliers, not amounts owed by customers, so it does not appear in the entry for a credit sale to a customer.

Common Pitfalls:
A common mistake is to treat every sale as if cash is received immediately, leading to entries involving only Cash and Sales. Another pitfall is confusing Accounts Receivable with Accounts Payable due to similar wording. Some learners also forget that revenue should be recognised when earned, not only when cash is collected, which is the accrual principle. Keeping the sequence of credit sale followed by later collection clear in mind helps avoid these errors in both exams and practical accounting work.

Final Answer:
Debit Accounts Receivable and credit Sales Revenue.