The account distribution for sales of inventory on account is:
A)Debit Merchandise Inventory and Accounts Receivable;credit Cost of Goods Sold and Sales.
B)Debit Accounts Receivable/customer and Cost of Goods Sold;credit Sales and Merchandise Inventory.
C)Debit Accounts Payable/vendor and Cost of Goods Sold;credit Accounts Receivable/customer and Checking.
D)None of these.

Question

Quizplus · Accepted Answer

The correct account distribution for sales of inventory on account involves debiting Accounts Receivable (to record the amount the customer owes the company) and Cost of Goods Sold (to record the cost of the inventory sold). The credits go to Sales (to record the revenue from the sale) and Merchandise Inventory (to decrease the inventory since it has been sold). This reflects the dual effect of selling inventory: recognizing revenue and the cost associated with that revenue.

The Account Distribution for Sales of Inventory on Account Is