Asked by Susana Guerrero on Apr 26, 2024
Verified
Mack Industries uses the perpetual inventory system. What is the entry to record a $300 sale on account to customer Jake Sanders, with a $100 cost of sale?
A) Debit Accounts Receivable for $300; credit Sales for $300; debit Cost of Goods Sold for $100; credit Merchandise Inventory for $100.
B) Debit Accounts Receivable for $300; credit Sales for $100; debit Cost of Goods Sold for $300; credit Merchandise Inventory for $100.
C) Debit Accounts Receivable for $300; credit Sales for $300.
D) Debit Sales for $300; credit Accounts Receivable for $300.
Perpetual Inventory System
An inventory tracking system that updates item records continuously as transactions occur.
Cost of Sale
Costs directly related to the production of the goods sold by a company.
Merchandise Inventory
Goods that a retailer, wholesaler, or distributor holds for the purpose of selling to customers in the normal course of business.
- Understand the documentation of sales transactions, encompassing the cost of goods sold, within both periodic and perpetual inventory methods.
- Highlight the distinctions among accounts in the perpetual inventory system.
Verified Answer
SW
Samantha WilsonMay 01, 2024
Final Answer :
A
Explanation :
The correct entry involves recording the sale by debiting Accounts Receivable and crediting Sales for the sale amount ($300), and recording the cost of the sale by debiting Cost of Goods Sold and crediting Merchandise Inventory for the cost amount ($100).
Learning Objectives
- Understand the documentation of sales transactions, encompassing the cost of goods sold, within both periodic and perpetual inventory methods.
- Highlight the distinctions among accounts in the perpetual inventory system.