Mitchell uses a perpetual inventory system.Mitchell sells a computer from inventory for $1,198 on credit.Mitchell originally bought the computer from IBM for $790.What journal entry (entries)will Mitchell prepare to record the sale?
A)Debit Cash and credit Sales Revenue for $1,198;debit Cost of Goods Sold and credit Inventory for $790.
B)Debit Accounts Receivable for $1,198,credit Inventory for $790,and credit Gross Profit for $408.
C)Debit Accounts Receivable and credit Sales Revenue for $1,198;debit Cost of Goods Sold and credit Inventory for $790.
D)Debit Inventory for $790,debit Cost of Goods Sold for $408,and credit Accounts Receivable for $1,198.

Question

Quizplus · Accepted Answer

Two entries are required to record a sale when a perpetual inventory system is in use.The first entry includes a debit to Accounts Receivable and a credit to Sales Revenue for $1,198,the selling price of the goods sold.The second entry includes a debit to Cost of Goods Sold and a credit to Inventory for $790,the cost of the goods that were sold.

Mitchell Uses a Perpetual Inventory System