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

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.