Able sells and delivers a piece of equipment to Smythe for $1,800 on August 1 and the equipment cost $1,200. The sale is a credit sale. How is this transaction accounted for under a perpetual system of inventory?
A) $$\begin{array} { | c | c | c | }
\hline \text { Sales Revenue } & 1,200 & \
\hline \text { Accounts Receivable } & & 1,200 \
\hline
\end{array}$$
B) $$\begin{array} { | c | c | c | }
\hline \text { Accounts Receivable } & 1,800 & \
\hline \text { Sales Revenue } & & 1,800 \
\hline \text { Cost of Goods Sold } & \$ 1,200 & \
\hline \text { Inventory } & & \$ 1,200 \
\hline
\end{array}$$
C) $$\begin{array} { | c | c | c | }
\hline \text { Sales Revenue } & 1,800 & \
\hline \text { Accounts Receivable } & & 1,800 \
\hline
\end{array}$$
D) $$\begin{array} { | c | c | c | }
\hline \text { Accounts Receivable } & 1,200 & \
\hline \text { Sales Revenue } & & 1,200 \
\hline
\end{array}$$

Question

Able sells and delivers a piece of equipment to Smythe for $1,800 on August 1 and the equipment cost $1,200. The sale is a credit sale. How is this transaction accounted for under a perpetual system of inventory?
A) $$\begin{array} { | c | c | c | } 
\hline \text { Sales Revenue } & 1,200 & \
\hline \text { Accounts Receivable } & & 1,200 \
\hline
\end{array}$$
B) $$\begin{array} { | c | c | c | } 
\hline \text { Accounts Receivable } & 1,800 & \
\hline \text { Sales Revenue } & & 1,800 \
\hline \text { Cost of Goods Sold } & \$ 1,200 & \
\hline \text { Inventory } & & \$ 1,200 \
\hline
\end{array}$$
C) $$\begin{array} { | c | c | c | } 
\hline \text { Sales Revenue } & 1,800 & \
\hline \text { Accounts Receivable } & & 1,800 \
\hline
\end{array}$$
D) $$\begin{array} { | c | c | c | } 
\hline \text { Accounts Receivable } & 1,200 & \
\hline \text { Sales Revenue } & & 1,200 \
\hline
\end{array}$$

Quizplus · Accepted Answer

Under a perpetual inventory system, the sale is recorded by debiting Accounts Receivable and crediting Sales Revenue for the sale amount ($1,800). Additionally, Cost of Goods Sold is debited and Inventory is credited for the cost of the equipment ($1,200).

Able Sells and Delivers a Piece of Equipment to Smythe Sales Revenue 1,200 Accounts Receivable 1,200\begin{array} { | c | c | c | } \hline \text { Sales Revenue } & 1,200 & \\\hline \text { Accounts Receivable } & & 1,200 \\\hline\end{array} Sales Revenue Accounts Receivable ​1,200​1,200​​

Able Sells and Delivers a Piece of Equipment to Smythe $\begin{array} { | c | c | c | } \hline \text { Sales Revenue } & 1,200 & \\\hline \text { Accounts Receivable } & & 1,200 \\\hline\end{array}$