A company sold merchandise with a cost of $213 for $440 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.
A)a debit to Sales Revenue and a credit to Cash for $440
B)a debit to Cash and a credit to Sales Revenue for $440
C)a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $213
D)a debit to Merchandise Inventory for $213 and a credit to Cost of Goods Sold for $213

Question

Quizplus · Accepted Answer

The entry to record the cost of merchandise sold under the perpetual inventory system includes a debit to Cost of Goods Sold and a credit to Merchandise Inventory for the cost of the merchandise sold. In this case, the cost of the merchandise sold is $213, so the entry would be a debit to Cost of Goods Sold for $213 and a credit to Merchandise Inventory for $213. Option A and B are incorrect because they do not record the cost of the merchandise sold, but rather the sales revenue received. Option D is incorrect because it records the opposite entry, debiting Merchandise Inventory and crediting Cost of Goods Sold, which would result in an incorrect balance for both accounts.

A Company Sold Merchandise with a Cost of $213 for $440